The BLOM Bond Index (BBI) lost 0.11% over the past week to reach 104.93 points due to lower demand for medium and long term Lebanese Eurobonds. Thus BBI lagged behind the JP Morgan Emerging Markets’ Bond Index which gained a weekly 0.07% to 681.87 points.
The yields on the 5Y and 10Y Lebanese notes increased from 5.96% and 6.45% to 5.98% and 6.48%, respectively.
Similarly, in the United States, demand for medium and long term treasuries declined, causing the yields on the 5Y and 10Y maturities to inch up by 17 basis points (bps) and 15 bps to 1.53% and 2.19%, respectively. This partly came after the Federal Reserve announced that it would contemplate increasing interest rates in December. Consequently, the spread between the yields on the 5Y Lebanese Eurobonds and their US comparable narrowed from 460 bps to 445 bps while the 10Y spread shrunk from 441 bps to 429 bps.
Compared to the above spreads, Lebanon’s 5Y Credit Default Swaps (CDS) showed a smaller risk premium, trading at broadened 398-420 bps, slightly higher than last week’s 393-415 bps. The 5Y CDS quotes of Saudi Arabia and of Dubai widened from 130-140 bps and 190-198 bps to 142-154 bps and 193-206 bps, respectively. The 5Y CDS of Brazil narrowed from 457-464 bps to 442-446 bps, while those of Turkey went up from 250-253 bps to 253-257 bps.