By Alexander Saeedy
JPMorgan Chase & Co. said Monday that it would exclude Russian sovereign and corporate debt from all of its widely tracked fixed-income indexes, as Wall Street's decoupling from the Russian economy deepened in the wake of economic sanctions tied to the invasion of Ukraine.
JPMorgan's move, effective March 31, will exclude Russia's sovereign and corporate debt from some of the bank's fixed-income benchmarks, including the Emerging Market Bond Index (EMBI) and the Corporate Emerging Market Bond Index (CEMBI). Along with Russia, Belarus's sovereign debt will also be excluded from the bank's environmental, social, and governance-linked indexes as of March 31, JPMorgan said.
In addition to its large public indexes, Russian debt will be pulled from any custom indexes, the bank said.
Some investors called on JPMorgan to exclude Russian securities soon after the invasion of Ukraine.
"Index inclusion encourages, and even forces, investment in Russia," said Timothy Ash, senior emerging markets sovereign strategist for BlueBay Asset Management in London.
There are about $415 billion in assets tracking JPMorgan's EMBI and about $140 billion tracking CEMBI, according to the bank. EMBI has about $34 billion in nominal value of Russian sovereign-linked debt, and CEMBI has about $28 billion of bonds by issuers including Gazprom and Sberbank.
JPMorgan's pledge will likely spur U.S. investment funds focused on emerging markets to attempt to sell more Russian securities, as they try to mirror the composition of the bank's widely tracked indexes. However, they might struggle to match any changes to their Russia weightings if trading remains closed because of sanctions.
Before the invasion, Russian sovereign debt made up about 6% of JPMorgan's local-currency emerging-market bond index and 2.7% of an index for dollar-denominated bonds. The drop in Russian sovereign bond prices and the fall of the ruble have brought these weightings down to 1.8% and 0.7%, respectively.
JPMorgan had polled investors on whether to kick Russian debt out of its indexes in recent weeks. Other index makers have already pulled Russian securities from their emerging-market benchmarks, including MSCI Inc., FTSE Russell, and S&P Dow Jones Indices.
Write to Alexander Saeedy at alexander.saeedy@wsj.com