JPMorgan to exclude new debt from sanctioned Chinese firms in bond indexes after Trump’s executive order

JPMorgan says its indexes include 72 securities linked to sanctioned Chinese companies

Family of Asian credit indexes or JACI is expected to be most impacted with a combined weight of 3.7 per cent

2-MIN READ2-MIN

A flag-raising ceremony to celebrate the 71st anniversary of the People’s Republic of China’s founding in October. Trump’s executive order has prompted JPMorgan to exclude new bonds from sanctioned issuers from its indexes. Photo: Xinhua

Published: 4:33pm, 18 Nov 2020Updated: 4:49pm, 18 Nov 2020

JPMorgan Chase’s global debt indexes will exclude new bonds issued by Chinese companies that fall under sanctions announced last week by Donald Trump’s administration, according to a note the lender sent to clients on Tuesday.

The decision applies to new debt, taps or re-openings by impacted issuers, JPMorgan said in the note. Existing bonds of sanctioned companies will remain in the indexes for now. The US bank will re-evaluate their eligibility “once there is more clarity on the impact to benchmark replication.”

JPMorgan said its indexes include 72 securities linked to sanctioned companies, adding that the family of Asian credit benchmarks known as JACI is expected to be most impacted with all sanctioned firms with a combined weight of 3.7 per cent.

The bank declined to comment further when contacted by Bloomberg on Wednesday.

Trump on November 12 signed an executive order barring American investments in Chinese firms owned or controlled by the military, his latest bid to pressure Beijing over what he views as abusive business practices.

Trump’s executive order on November 12 bans investment in Chinese firms deemed to have ties with the military. Photo: AP