(Adds details on index, background)
MEXICO CITY, June 2 (Reuters) - Citigroup will add Mexican peso-denominated debt to its World Government Bond Index in October, which will make Mexico the first Latin American country in the closely watched benchmark.
Citigroup (C.N) told clients on Wednesday Mexico’s bond market was big enough to be included in the index, which is used as a benchmark by major funds and could attract more investment in the country.
Mexico’s inclusion in the index has been widely anticipated and has helped drive bond yields to all-time lows in recent sessions.
The yield on the government’s benchmark 10-year peso bond MX10YT=RR bid down 11 basis points to an all-time low for a rates on 10-year issues.
Citigroup said in March that Mexico could join the index in October, and Banamex, the bank’s Mexican subsidiary, last week doubled its forecast of the amount of new money that would flow into the Mexican bond market after it was added to the WGBI.
Banamex said funds that use the WGBI as a benchmark would likely funnel around $23.6 billion into Mexican debt.
Citigroup said the Mexican debt eligible for inclusion in the index is worth $104.66 billion, “which represents a pro-forma market weight of 0.65 percent in the WGBI.”
Malaysia in 2007 was the last country to be included in the index. (Reporting by Michael O‘Boyle and Daniel Bases; writing by Jason Lange; Editing by Padraic Cassidy)