JPMorgan inclusion of Indian bonds to aid private credit

JPMorgan inclusion of Indian bonds to aid private credit

India’s inclusion into JPMorgan Chase & Co.’s bond index will give a boost to its private credit markets by providing a benchmark for investments and attracting more inflows, according BPEA Credit.

The inclusion constitutes a watershed moment for the country’s $1.2 trillion government debt market, with spillovers to other asset classes. Once the change takes effect on June 28, it will be easier to compare the performance of an Indian credit fund with an investment in Singapore, Korea or the U.S., said the head of BPEA Credit.

Founded in 2011, BPEA Credit has invested more than $1 billion of capital and focuses on India and Southeast Asia, according to its website. The firm has offices in Singapore, Mumbai and New Delhi.

“It gives a reference point” for offshore investors who look at both sovereign and corporate bonds, and other asset classes,” Kanchan Jain told Bloomberg.

Investors have already pumped billions of dollars into the sovereign bonds eligible to join the index, helping to push down yields on corporate notes.

That’s got implications for the fast growing market of non-bank lending. While still a fraction of the $1.7 trillion global market, the country is a hotspot in Asia for private credit, which typically attracts firms whose credit metrics make them ineligible for a bank loan.

“Eventually, this will bring in more transparency, and help in increasing fund flows to India fixed income,” Jain said.