LONDON: Pakistan is set to become the top-weighted country in JPMorgan’s planned frontier market local currency bond index, according to investors familiar with the process, marking a potential boost for Pakistan’s local debt market.
Sources briefed on the consultations said JPMorgan is finalising the structure of the new index, which is expected to track bonds from more than 20 frontier economies. Pakistan is projected to receive one of the largest allocations alongside countries such as Egypt, Vietnam, Kenya, Morocco, Nigeria, Sri Lanka and Bangladesh.
Fund managers involved in discussions said the index could include between 20 and 25 countries, with individual country weightings capped at around 8 to 10 percent. Only bonds with a minimum size equivalent to $250 million and at least 2.5 years remaining maturity are expected to qualify.
JPMorgan has declined to comment publicly on the plans.
Market participants said the bank aims to share a formal framework by mid-year, with a potential launch expected next year. Some investors believe an initial announcement could come earlier, possibly in the coming months.
Analysts expect the new index to help deepen frontier market local currency bond markets, an objective long supported by international financial institutions seeking to reduce reliance on hard-currency borrowing.
Global asset managers estimate that tradable frontier local currency debt has expanded sharply over the past decade, reaching close to $1 trillion, as investors increasingly look beyond traditional emerging markets for higher yields.
Pakistan’s inclusion as a leading component could improve foreign investor visibility of its domestic bond market and support broader capital inflows, at a time when frontier economies are gaining attention amid shifting global investment trends.
