The BLOM Bond Index (BBI) improved by 0.20% over the past week to reach 105.047 points on account of higher demand for medium and long term Lebanese Eurobonds. The BBI managed to outperform the JP Morgan Emerging Markets’ Bond Index which gained a weekly 0.16% to 681.35 points.
Higher demand was registered for Lebanese Eurobonds maturing in 5 years and 10 Years. Yields, which have an inverse relationship with prices, on those respective maturities decreased over the past week from 6.00% to 5.96% and from 6.49% to 6.45%.
In the United States, the yield on the 10 Year treasury bonds remained stable on a weekly basis at 2.04% while the yield on the 5 Year notes rose from 1.34% to 1.36%. Consequently, the spread between the yields on the 5Y Lebanese Eurobonds and their US comparable narrowed from 466 bps to 460 bps while the 10Y spread shrunk from 445 bps to 441 bps.
However on a monthly and yearly basis, demand for US 5Y Treasury notes and 10Y Treasury bonds increased, but the source of that increase changed. China, the biggest holder of US debt trimmed down its holdings to deal with economic woes at home but higher domestic US demand compensated for the cut.
Lebanon’s 5Y Credit Default Swaps (CDS) improved slightly from 394-417 bps to 392-415 bps. The 5Y CDS quotes of Saudi Arabia and of Dubai went from 127-137 bps and 191-202 bps to 130-140 bps and 190-198 bps, respectively. The 5Y CDS of Brazil moved from 425-431 bps 457-464 bps while those of Turkey varied from 261-267 bps to 250-253 bps.