Barcap adds Japanese inflation-linked bonds to global index

Barclays Capital is adding Japanese inflation-linked bonds (JGBi) to its global inflation-linked index at the end of April. This follows the Japanese Ministry of Finance saying it would give foreign investors access to the JGBi market from April 1, having previously restricted use of the instruments to domestic institutions and central banks.

JGBi will have an expected weight of 1.2% in the UK bank’s global index. The market capitalisation of the global government inflation-linked now stands at more than $700 billion, having grown by 46% in 2004.

“Japan expects to issue ¥2 trillion in four auctions next year, although this could be larger should demand develop quickly,” said Alan James, Barclays Capital’s global inflation-linked strategist in London.

The global index is one of Barclays Capital’s group of inflation-linked bond indexes, and currently includes issues from the US, UK, France, Italy, Sweden, Canada and Australia. Germany will be added to its suite when it issues inflation-linked bonds later this year.