LONDON: JPMorgan is finalizing plans for a new index to track frontier market local currency bonds, as the bank looks to satisfy a growing appetite for riskier and more diversified high-yield debt. The proposed gauge targets 20-25 economies across Asia, Africa, and beyond.
The move comes amid a year-long slump in the dollar and recent market rallies like those seen in Argentina, Ecuador, and Uganda. JPMorgan declined to comment on the plans.
Six leading money managers who spoke to Reuters on condition of anonymity said the bank’s engagements with them reached an advanced stage in the second half of last year. The proposed index includes 20 to 25 countries, with Egypt, Vietnam, Kenya, Morocco, Kazakhstan, Pakistan, Nigeria, Sri Lanka, and Bangladesh having the largest “weightings,” according to three managers.
Bond sizes and caps on weighting
According to one source, there would be a limit that means no country has a weighting of more than 8%. A second source said an earlier consultation document had proposed a 10% limit. The index will only include bonds of at least $250 million equivalent, although this has raised issues around Zambia, which many would like to see included but historically sold smaller individual bonds.
“We expect they will give us a formal structure for the index around June with the opportunity to make some final comments,” said one senior fund manager. “They are likely to formally launch the index next year, we think.”
Another senior fund manager suggested the initial announcement might be as early as the end of March, which could also bring the formal launch date forward.
Analysis by Neuberger Berman estimates that tradable local-currency debt has tripled over the last decade to around $1 trillion. It also calculates that frontier market local FX debt outperformed JPMorgan’s mainstream emerging market local currency index by almost 2.5 percentage points over the last eight years, and also outstripped the EM dollar bond index.
“Their populations are expected to increase by another 800 million over the next 25 years more than the rest of the world combined — meaning they will play an increasingly important role in global economic growth,” according to the World Bank. “Their current underpricing of frontier market growth and general economic performance has been systematic.”
Analysts expect JPMorgan’s new debt index could help expand local currency bond markets, something long championed by the World Bank and IMF as a way to reduce the number of debt crises caused when currency crashes leave governments unable to pay hard-currency debt.
Zambia and eligibility requirements
The rising interest in frontier market debt also comes as shaken confidence in once-safe debt in the developed world pushes capital flows to other parts of the globe. Three of the investors raised questions about Zambia, which until recently had only sold sub-$250 million local-currency bonds. It was not included in some of JPMorgan’s early outlines but has since issued at least one larger bond.
One eligibility requirement that mirrors JPMorgan’s GBI-EM index of major emerging economies is that included bonds will have more than 2.5 years of remaining maturity — the time before full repayment is due. JPMorgan estimated in September the index would have approximately 400 basis points or more of “pick-up” in yield over the GBI-EM, with over 60% of the index constituents yielding more than 10%.
A potential promotion of top-weighted countries like Egypt and Nigeria to the GBI-EM index in coming years could alter the index’s makeup, possibly putting off some investors. “It will be important to nail that down,” one senior fund manager said.
Published in Dawn, February 4th, 2026