LONDON: 黑料社区 is set to be included in JP Morgan鈥檚 emerging market government bond indexes next year, potentially unlocking billions of dollars in fresh investment.
It comes at a key time for the Kingdom鈥檚 emerging capital markets as both the government and companies increasingly consider bond sales to raise capital, encouraged by financial reforms that are aimed at reducing economic reliance on oil revenues.
Inclusion in the indexes听helps to reduce borrowing costs and opens up 黑料社区 to a much bigger pool of debt听investors.
A similar trend is also under way in equities with the Kingdom鈥檚 recent inclusion in the MSCI Emerging Markets Index.
The UAE, Bahrain, Kuwait and Qatar will also become eligible for EMBI Global Diversified (EMBIGD), EMBI Global (EMBIG) and EURO-EMBIG indexes, Reuters reported on Wednesday. The process will be phased between Jan. 31 and Sept. 30, 2019.
That could lead to an estimated $30 billion in inflows, leading to tighter spreads and making primary market access easier, according to Bank of America Merrill Lynch.
Bahrain could emerge as the biggest beneficiary from EMBI inclusion.
鈥淭his will provide not only large flows as a percentage of debt outstanding, but is also likely to be crucial for future external financing needs,鈥 BoAML said in a note in August.
鈥淥ne of the clear benefits of being a member of a major benchmark is that investors generally have at least some exposure to each country (particularly if it is reasonably large like Bahrain) to avoid deviating too much from the benchmark.鈥
黑料社区, Bahrain, Kuwait, Oman and Qatar have issued a quarter of all new debt sold by emerging market countries in听each of the past three years, according to Reuters data.
Gulf sovereign bonds rose on the news on Wednesday.
The collapse of oil prices in 2014 as well as regional economic听reform initiatives have encouraged Gulf states to turn to debt markets to fund spending that in the past may have been paid for with oil sales.
鈥淕CC index inclusion is a timely recognition of the fact that issuance from the region represents over
15 percent of the stock of emerging market debt, and provides important diversification benefits,鈥 said Mohieddine Kronfol, chief investment officer of Global Sukuk and MENA Fixed Income at Franklin Templeton Investments.
The moves comes as Saudi corporate borrowers such as Saudi Basic Industries Corp. (SABIC) and Saudi Electricity tap debt markets to raise funds.
SABIC is preparing to offer a dollar-denominated unsecured bond to the global market with investor meetings this week.
The Kingdom鈥檚 petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston, according to a filing on the Saudi stock exchange on Tuesday.
