Key Emerging Market Government Bond Benchmark Added
More and more investors are increasingly buying into developing countries’ debt markets as those nations’ economies
become less risky, their governments look domestically for sources of finance, and investors seek higher fixed-income
returns. In response, Thomson Datastream and Credit Analysis clients now have access to the JPMorgan Government
Bond Index-Emerging Markets (GBI-EM), which is the first comprehensive, global index to track local-currency
government bonds issued by emerging markets.
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With the GBI-EM indices, TF provides investors with a well-defined benchmark for local debt issues within the
emerging markets universe to help clients identify markets with the best risk/return potential and structure
investable portfolios.
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The GBI-EM aggregates nations that meet JPM’s criteria for an emerging market:
Czech Republic
Argentina
Hungary
Brazil
Poland
Chile
Slovakia
Colombia
Russia
Mexico
Turkey
Peru
India
Indonesia
China
Malaysia
South Africa
Thailand
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There are three main composite indices: GBI-EM GLOBAL, GBI-EM and GBI-EM BROAD. Clients may track
the individual markets within or the aggregate.
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GBI-EM BROAD includes all 18 countries, as long as they have not been classified as high-income by the
World Bank for the past two consecutive years (lagged one year). GBI-EM includes 13 countries that are
low/middle income whereas GBI-EM GLOBAL tracks 14 markets and is a readily investible (though narrower)
version of GBI-EM BROAD.
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Each index also offers versions (labelled diversified) that limit the proportions of larger constituents to provide a
better distribution of weights among the countries.
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There are a total of nine datatypes, which include total return, redemption yield, duration and convexity. History
goes back to year-end 2001, where applicable.
As external debt spreads compress and opportunities seem more appealing in local rates, the likely combination of
increasing demand and supply should pave the way for deeper and broader local markets, which the GBI-EM will attempt
to capture.