Low Demand on US Treasuries as the FOMC Keeps Interest Rates Unchanged

The yields on the Lebanese Eurobonds maturing in 5years (Y( narrowed from 6.23% to 6.10% this week, while the yields on the 10Y bonds remained unchanged at 6.79%.

Over the past week, the BLOM Bond Index (BBI) marginally ticked up by 0.01%, to end the week at 104.43 points. It surpassed the JP Morgan Emerging Markets’ Bond Index (EMBI) which slid by 0.45% and stood at 803.07 points.

In the US, demand on treasuries was low as the FOMC announced its expected decision to keep interest rates unchanged, yet forecasted a third rate hike in December 2017 as well as a kick-start to the reduction of the FED’s balance sheet in October. As such, yields on the 10 year T-bills rose to their highest levels since Aug.8, 2017, that is, from 2.20% to 2.28% this week, while yields on the 5Y T-bills also reached 1.89% this week, up from 1.79% on September 14th.

The 5Y and 10Y spreads between the Lebanese Eurobonds and their US comparable declined from 444 bps and 459 bps to 421 bps and 451 bps, respectively.

5 Year Credit Default Swaps, Mid-Prices (in basis points)

  20/09/2017 14/09/2017
Lebanon 445 432
KSA 90 83
Dubai 149 140
Brazil 204 182
Turkey 186 163

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 20/09/2017 14/09/2017 Change 20/09/2017 14/09/2017 Change bps
12/11/2018 5.15 100.38 100.7 -0.32% 4.80% 4.52% 28
23/04/2019 5.5 100.88 100.88 0.00% 4.92% 4.92% -1
20/05/2019 6 101.63 101.7 -0.07% 4.96% 4.93% 3
28/11/2019 5.45 100.75 100.75 0.00% 5.08% 5.08% 0
09/03/2020 6.375 102.25 102.25 0.00% 5.39% 5.40% -1
14/04/2020 5.8 100.6 100.63 -0.03% 5.54% 5.53% 1
19/06/2020 6.15 101.25 101.25 0.00% 5.65% 5.65% 0
12/04/2021 8.25 107.88 107.75 0.12% 5.77% 5.82% -5
04/10/2022 6.1 99.88 99.38 0.50% 6.13% 6.24% -12
27/01/2023 6 98.75 98.88 -0.13% 6.28% 6.25% 3
22/04/2024 6.65 101 101 0.00% 6.46% 6.46% 0
04/11/2024 6.25 98.63 98.63 0.00% 6.49% 6.49% 0
03/12/2024 7.00 102.75 102.75 0.00% 6.51% 6.51% 0
26/02/2025 6.20 97.88 98 -0.12% 6.56% 6.54% 2
12/06/2025 6.25 97.88 97.88 0.00% 6.60% 6.60% 0
28/11/2026 6.60 99.25 99.25 0.00% 6.71% 6.71% 0
23/03/2027 6.85 100.5 100.5 0.00% 6.78% 6.78% 0
29/11/2027 6.75 99.63 99.63 0.00% 6.80% 6.80% 0
03/11/2028 6.65 98 98.13 -0.13% 6.91% 6.89% 2
26/02/2030 6.65 97.38 97.5 -0.12% 6.97% 6.95% 1
22/04/2031 7.00 99.25 99.38 -0.13% 7.09% 7.07% 2
23/03/2032 7.00 99 99 0.00% 7.11% 7.11% 0
02/11/2035 7.05 98.38 98.13 0.25% 7.21% 7.24% -3
23/03/2037 7.25 98.75 98.88 -0.13% 7.37% 7.36% 1

 

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