South Korea Fails to Join Global Sovereign Bond Index... Remains on Watchlist (Update)

[Image source=Yonhap News]

South Korea once again failed to be included in the World Government Bond Index (WGBI), one of the world's top three bond indices.

FTSE Russell, the UK-based manager of the WGBI, announced on the 27th (local time) the FTSE bond market country classification, stating that "South Korea will maintain its status as a watchlist country for the government bond index." In September 2022, South Korea was placed on the watchlist for potential upgrade to Market Accessibility Level 2 and consideration for inclusion in the FTSE WGBI.

The WGBI is a representative global bond index. Along with the Bloomberg-Barclays Global Aggregate Index and the JP Morgan Emerging Market Government Bond Index, it is considered one of the world's top three bond indices. Inclusion in the WGBI is significant not only for the increased inflow of passive funds but also for contributing to the stability of the government bond and foreign exchange markets.

The WGBI includes government bonds from 24 major countries such as the United States, the United Kingdom, Canada, and Japan. The estimated passive funds tracking the index amount to approximately $2.5 trillion. FTSE Russell regularly decides on WGBI inclusion twice a year, in March and September, based on factors such as government bond issuance size, national credit ratings, and market accessibility.

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