US-based investment bank JP Morgan has announced that Saudi Arabia and four other GCC countries will enter JP Morgan’s emerging market government bond indexes in 2019, a decision that is expected to lead to billions of dollars of foreign investment into their government debt.

JP Morgan government bond indexes offer performance benchmarks for international investors in emerging market debt. Membership of the indexes can make it easier for countries to sell bonds and can reduce borrowing costs.

JP Morgan’s decision to include the GCC states - including Bahrain, Kuwait, Qatar and UAE as well as Saudi Arabia - follows a significant step-up in debt issuance from the Gulf Arab region in recent years. That increase has been spurred on by lower oil prices, with governments issuing bonds to maintain and increase sizeable state spending.

According to a report from news agency Reuters, the GCC states will be eligible to enter the EMBI Global Diversified, EMBI Global and EURO-EMBIG indexes. Their entry will be implemented in phases between 31 January and 30 September 2019. Conventional bonds and Islamic bonds (sukuk) will be eligible for inclusion in the indexes, but sukuks will require a credit rating from at least one of the three major ratings agencies, according to the Reuters report.

Saudi Arabia’s Finance Ministry expects inclusion in the indexes to boost foreign debt inflows in the kingdom by up to $11bn.

“[Inclusion] will add support to the investor base, as well as improve liquidity levels for the government’s issues and the issuances of government-owned companies,” the ministry said in a statement.