JP Morgan launches dollar-denominated Middle East Composite Index

New York, Oct. 23 - J.P. Morgan announced the introduction of its J.P. Morgan Middle East Composite Index, a new fixed income benchmark that will track dollar-denominated debt from sovereign, quasi-sovereign and corporate issuers.

The MECI, as the index is known, is made up of regularly traded, liquid, fixed- and floating-rate instruments with a minimum face amount outstanding of $300 million and at least five years until maturity at issuance. Issues must be more than one year from maturity to remain included in the index.

As of Sept. 30, the index has a total market value of $156.5 billion and represents 73% of the dollar-denominated external debt from Middle Eastern issuers, according to J.P. Morgan. It initially includes 167 issues from 61 issuers in 10 countries.

United Arab Emirates' issuers are the largest group by country, making up 39% of the index, followed by Qatar at 28.2% and Israel at 10.3%. Of the total, 47.6% are corporate, 36.7% sovereigns and the remaining 15.5% quasi-sovereigns. Investment-grade issues account for 77% of the index, leaving the remaining 23% for high yield. The average rating is A2 from Moody's Investors Service and A- from Standard & Poor's. All figures are as of Sept. 30.

J.P. Morgan is using the World Bank definition of the Middle East, excluding North Africa. Eligible issuers are those from Bahrain, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia and United Arab Emirates.

The bank has history going back to Dec. 31, 2001.

The index follows a similar methodology to J.P. Morgan's popular Emerging Markets Bond Index Global (EMBI) and Corporate Emerging Markets Bond Index Broad (CEMBI). It includes "several major" issuers that are not part of the broader indexes, noted Gloria Kim, J.P. Morgan's head of global index research.

"The Middle East has become an increasingly important component of the emerging markets debt universe after a decade of prolific issuance," said Stephen Dulake, J.P. Morgan's head of international credit research, in a news release.

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