Zambia Joins J.P. Morgan's New Frontier Bond Index

Zambia has been included in the GBI-EM Edge, a new government bond index launched by J.P. Morgan to track what the bank classifies as frontier markets: countries carrying higher risk but offering correspondingly higher returns.

The index is expected to cover up to US$330 billion of government debt across 26 countries, most of them in Africa and Asia. African issuers will account for at least 45 per cent of it.

Indices of this kind matter because of how institutional money moves. Global investors use them as a reference point when appraising markets, and many funds track them directly, so inclusion brings buyers who were not previously looking at Zambian paper.

Zambia's place reflects several years of economic repair: sustained GDP growth, a marked fall in inflation and a steadier exchange rate. The decisive factor was auction size. J.P. Morgan tracks only bonds above a minimum deal size, and the Bank of Zambia's decision to increase government bond auction volumes lifted Zambian issues above that threshold.

The practical effects should follow the demand. Wider participation in auctions gives the Treasury a more stable and cheaper source of funding. Lower government yields tend to pull borrowing costs down across the wider economy, easing rates for private-sector borrowers. Sustained foreign inflows into kwacha debt would also support the exchange rate.

For a country that defaulted on its eurobonds in 2020, a place in a J.P. Morgan index is a measure of how far the recovery has come.