Hundreds of millions of dollars from foreign investors are likely to flow into Ukrainian bonds next month despite the threat of war with Russia. JPMorgan Chase & Co. is planning to add Ukraine’s local-currency debt to a popular emerging-market bond index known as the GBI-EM. It will come into effect from March 31 with a weighting of 0.12%, according to an October 2021 note to clients, which said close to 70% of investors supported the move. A person familiar with the matter said this plan is still on track. JPMorgan declined to comment.
Funds managing $222 billion used this index as a benchmark as of January. If they all decide to add the Ukrainian bonds, that would mean an inflow of $266.4 million into the market. “This is good news for Ukraine. All of a sudden you’ll have big index players channeled toward that particular bond market,”said Monika Dutt, head of a passive strategies research team at Morningstar Inc.
Excerpted from: The Wall Street Journal (print edition) February 16, 2022