• JPMorgan Chase is finalizing a new benchmark index for local-currency frontier market bonds, with a potential announcement by mid-2026.

• The index would include 20 to 25 countries with capped weightings to limit concentration risk.

• JPMorgan estimates the index could offer a yield premium of about 400 basis points over its flagship GBI-EM index.

JPMorgan Chase is preparing a new reference index dedicated to frontier market local-currency bonds, according to several sources familiar with the matter, as investor appetite grows for riskier but potentially higher-return assets.

The index, which JPMorgan could announce by mid-2026, would include between 20 and 25 countries. The proposed universe includes Egypt, Vietnam, Kenya, Morocco, Kazakhstan, Pakistan, Nigeria, Sri Lanka and Bangladesh. JPMorgan plans to cap country weightings to prevent excessive concentration, with no single country expected to exceed 8% to 10% of the index, according to options still under discussion.

Consultations between JPMorgan and major asset managers intensified in the second half of 2025. “We expect to receive a formal index structure around June, followed by a final comment period,” a fund manager told Reuters, speaking on condition of anonymity. The formal launch could follow in 2027, although some investors anticipate a preliminary announcement as early as late March.

A rapidly expanding market

This initiative emerges as frontier markets benefit from a prolonged period of dollar weakness and strong performances in countries such as Argentina, Ecuador and Uganda. According to estimates from asset manager Neuberger Berman cited by Reuters, tradable local-currency debt in these economies has tripled over the past decade to reach nearly $1 trillion.

Over the past eight years, frontier market local-currency debt—issued by relatively small economies with limited representation in international portfolios—has outperformed traditional emerging market debt indices by nearly 2.5 percentage points. “This confirms that the growth and economic performance of these countries have been structurally undervalued,” said Rob Drijkoningen, head of emerging market debt at Neuberger Berman.

Strict eligibility criteria

The index would include only bonds with a minimum size equivalent to $250 million and at least 2.5 years of remaining maturity. These criteria raise questions about the eligibility of some countries, such as Zambia, which has historically issued smaller bonds, although recent issuances could alter that assessment.

JPMorgan estimates that the new index would offer a yield premium of about 400 basis points over its flagship GBI-EM index, with more than 60% of its constituents yielding above 10%. JPMorgan created and manages the GBI-EM as the global benchmark for measuring the performance of local-currency government bonds in emerging markets.

International institutions, including the World Bank and the International Monetary Fund, have long encouraged the development of local-currency bond markets to reduce debt crisis risks linked to currency shocks.

Fiacre E. Kakpo