FTSE Russell will add South Korean and Indian government bonds to two of its indexes, a move that could bring in billions of dollars in foreign capital inflows.
The inclusions reflect efforts by the two countries to improve international investors' access to their sovereign bonds, according to a statement from FTSE Russell on Tuesday.
South Korea's government has been pushing forward various measures aimed at getting its sovereign notes on the World Government Bond Index since being placed on FTSE Russell's watch list in September 2022, including scrapping taxes on foreigners' income from investments in treasury bonds.
In the statement, the index provider noted South Korean authorities' efforts to expand global investment into the local government bond market, saying it has been monitoring their capital-markets reforms closely.
South Korea's finance minister, Choi Sang-mok, said the country is committed to ensuring smooth index inclusion, "which will bring a welcomed increase in international investment in our capital markets."
South Korean bonds will be added to the FTSE World Government Bond Index starting November 2025, while India will be added to the FTSE Emerging Markets Government Bond Index in September of that year.
FTSE Russell said India's sovereign bond inclusion "reflects the continued progress in the accessibility of the market for these securities for international investors and the growing importance of the Indian government bond market in mainstream global emerging markets bond portfolios."
Indian bonds have also recently been included in other international benchmarks like JP Morgan's GBI-EM Index, DBS Group Research senior economist Radhika Rao noted.
Indian sovereigns' appeal to foreign investors lies factors such as positive real yields, a supportive macro backdrop, strong defences against market volatility, she said in a note.
"Inclusion into the global fixed income benchmarks will necessitate maintained broader macro stability and better fiscal discipline," Rao added.