JPMorgan Chase & Co. has reclassified Kuwait from an emerging to a developed market, initiating its removal from the Emerging Markets Bond Index (EMBI) starting March 31, 2025, over a six-month period.
This reclassification coincides with Kuwait’s legislative progress on a new debt law, poised to authorise up to $65 billion in bond issuance over the next 50 years. Finance Minister Noura Al-Fassam stated, “The debt law is now in its final stages.”
Kuwait’s last debt issuance was $8 billion in March 2017, just before the previous debt law expired.
The reclassification is expected to narrow the investor base within emerging markets. Anders Faergemann, co-head of global fixed income in emerging markets at Pinebridge Investments, noted, “On paper, the investor base for Qatar and Kuwait will narrow by taking them out of the EM indices but we can still invest in both countries off benchmark.” Kuwait projects a budget deficit of 6.31 billion dinars ($20.4 billion) for the fiscal year 2025-2026, up from 5.6 billion dinars ($18.2 billion) in the current year, partly due to lower-than-expected oil revenues.
The reclassification of Kuwait and Qatar from emerging to developed market status is anticipated to influence global financial trends, potentially widening the yield spread between emerging market bonds and U.S. Treasuries by approximately 11 basis points.
Kuwait’s transition to developed market status reflects its economic evolution and commitment to financial reforms, positioning the nation for increased foreign investment and long-term growth.
