JPMorgan places Morocco among the heavyweights of its new $330 billion index

The kingdom’s inclusion in this future index had been discussed as early as February. It has now been confirmed by a JPMorgan note seen by Reuters, which specifies its final composition and launch schedule.

Morocco appears among the countries expected to have the largest weightings, alongside Egypt, Vietnam, Kazakhstan, Bangladesh, Pakistan, Nigeria and Sri Lanka. The kingdom’s exact share has not been specified, while each country’s weighting will be capped at 8%.

On Bladi.net : Morocco, a very solid borrower according to S&P Global Ratings

The GBI-EM Edge will track sovereign bonds denominated in the currency of their country of issuance. To qualify, a security must represent at least the equivalent of $250 million and have a minimum remaining maturity of two and a half years before repayment.

Moroccan bonds gain visibility

The importance for Morocco lies in the influence of JPMorgan’s indices among international fund managers. These benchmarks serve as references for allocating investments among different markets. A high weighting could therefore increase the visibility of Moroccan dirham-denominated bonds and attract more foreign investors.

This recognition comes as Morocco remains classified as a frontier market by MSCI. The two classifications do not, however, cover the same assets: MSCI primarily assesses the equity market, while JPMorgan’s new index focuses on public debt in local currency.

African countries will account for nearly 45% of the GBI-EM Edge, compared with about one-third for Asian frontier markets. The index is expected to offer an average nominal yield close to 10.4%, or 4.4 percentage points more than JPMorgan’s main index devoted to local-currency bonds in emerging markets. This yield concerns all 26 countries and not Moroccan debt alone.

On Bladi.net : Borrowing abroad is becoming increasingly expensive for Morocco

The $330 billion figure also corresponds to the total value of the bonds tracked by the index. It is therefore not an amount intended for Morocco. The kingdom’s entry among its main components could nevertheless direct some of the capital managed according to JPMorgan’s indices toward its securities.

After several months of preparation, the effective launch of the GBI-EM Edge thus moves Morocco from candidate status to that of a confirmed heavyweight in the American bank’s new bond index.