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February 19, 2008, Washington D.C.
The World Bank announced today that it has selected PIMCO to develop and manage investment strategies that will promote institutional investment in the local currency bonds of emerging market countries.
In a companion move, IFC, a member of the World Bank Group, announced that it has entered an agreement for the data and index provider Markit to develop a transparent index of emerging market local currency bonds.
The Global Emerging Markets Local Currency Bond (Gemloc) program was launched by the World Bank Group in October 2007 with the goal of helping emerging market countries attract more investment and develop their local currency bond markets.
“Gemloc will help boost growth and overcome poverty by increasing investment in emerging markets and improving access to long-term local currency finance,” said World Bank Group President Robert B. Zoellick. “With its link between policy reform and investment, this innovative program could help create new emerging market asset classes for investors worldwide.”
William S. Thompson, CEO of PIMCO, said: "PIMCO is honored to be part of this initiative with the World Bank Group. We look forward to leveraging our investment experience in emerging markets to help promote institutional investment in the local currency bond markets of developing countries.”
Markit will create the Markit iBoxx Global Emerging Markets Bond Index, or GEMX, in cooperation with IFC, which will serve as a benchmark for the program and for the wider investor community. GEMX aims to expand the number of countries targeted by global investors. The index, which is expected to launch in March, will initially include about 20 emerging markets. It is expected that an additional 14 countries will be added within a year, with more to be added over time.
“Markit is excited to be working with IFC on a local currency emerging market bond index,” said Lance Uggla, CEO of Markit. “GEMX is designed to allow institutional investors around the world to benchmark themselves to this asset class in a transparent, objective way.”
Inclusion in the new index will be based on market size and a set of criteria, developed by the ratings, research, risk, and policy advisory company CRISIL in collaboration with IFC, that assess the investment climate. The new index and the underlying criteria set out transparent guidelines that countries can use to implement reforms with the aim of improving their index weight and attracting additional investment.
Under the Gemloc program, the World Bank will provide advisory services to help emerging market countries implement policy reforms and improve their market infrastructure.
About the World Bank
The International Bank for Reconstruction and Development (World Bank) aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services. Established in 1944 as the original institution of the World Bank Group, IBRD is structured like a cooperative that is owned and operated for the benefit of its
185 member countries
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About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC's vision is that people should have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit
www.ifc.org
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About PIMCO
With more than $747 billion assets under management, PIMCO is one of the world’s leading fixed-income investment management companies. The firm also manages a total of $79.6 billion in total emerging markets instruments, with $50 billion of that being in local markets exposures. Founded in 1971 and based in Newport Beach, California, the company is owned by Allianz Global Investors, a subsidiary of the Munich-based Allianz Group, a leading global insurance company with nearly $1.5 trillion in assets and represented in 70 countries around the globe.
About Markit
Markit Group Limited is the leading provider of independent data, portfolio valuations and OTC derivatives trade processing to the global financial markets. The company receives daily data contributions from 90 dealing firms, and its services are used by almost 1,000 institutions to enhance trading operations, reduce risk, and manage compliance. Markit is the owner of the widely referenced iTraxx, CDX and iBoxx families of cash and synthetic indices. For more information, see
www.markit.com
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About CRISIL
CRISIL is India's leading ratings, research, risk, and policy advisory company.
CRISIL offers domestic and international customers a unique combination of local insights and global perspectives, delivering independent information, opinions and solutions that help them make better informed business and investment decisions, improve the efficiency of markets and market participants, and help shape infrastructure policy and projects. For more information, visit
www.crisil.com
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