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World Bank Group Selects PIMCO and Markit for Gemloc Program to Boost Investment in Emerging Markets

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 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.