CAPITAL MARKETS
JPMorgan Re-Classifies Qatar and Kuwait as Developed Markets
JPMorgan has re-classifed Qatar and Kuwait as developed markets instead of emerging markets in their Emeging-Markets Bond Index.
The re-classification process will take six-months beginning March 31.
This change means new bonds from these countries won’t be added to the index,
The United Arab Emirates (UAE) may also be re-classified next year.
Taking Qatar and Kuwait out of the EMBI could make the index riskier, increasing the extra yield investors want compared to U.S. Treasuries by 11 basis points, and it may shift investment money away from emerging markets.
Qatar, seen as a low-risk country with a small yield gap over Treasuries, could attract more developed-market investors, while Kuwait might soon issue new debt under a new law after years of political delays.
The UAE’s possible removal depends on its cost-of-living ratio staying high, which could lead to a phased exit from the index in the future.
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CAPITAL MARKETS
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