The BBI Continued to Recover as Cabinet Endorsed the Disassociation Policy this Week 

The BLOM Bond Index (BBI) stood at 100.21 points, up 0.4% from last week but still below the pre-crisis level of 102.38 points. However, by Dec.7th, Hariri’s resignation has been suspended and the first cabinet meeting followed, in which all political parties endorsed the policy of disassociation, spurring a wave of optimism.

The BBI outperformed the JP Morgan Emerging Markets’ Bond Index (EMBI) this week, which rose by an incremental 0.22%, ending the week at 804.64 points.

Against this backdrop, the yields on the 5Y Eurobonds slipped from 7.3% last week to 7.2%, while the yields on the 10Y bonds barely changed, settling at 7.50% this week instead of 7.55%. As such, the 5Y spread between the Lebanese Eurobonds and their US comparable declined from last week’s 521 basis points (bps) to 506 bps, while the 10Y spread retreated slightly from 518 bps to 513 bps.

This week’s positive developments were also reflected in foreign investors’ perception of risk in Lebanon, whereby Lebanon’s 5Y credit default swaps (5Y CDS) slipped from last week’s 569 bps to 539bps on Dec.07, 2017.

In the US, yields on treasuries maturing in 5 years were little changed, rising from 2.09% to 2.14%, while those on 10Y treasuries remained at 2.37%. Investors held off on major moves ahead of the nonfarm payrolls due this Friday and as the anticipation builds for the Federal Reserve’s policy meeting next week.

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 07/12/2017 29/11/2017 Change 07/12/2017 29/11/2017 Change bps
23/04/2019 5.5 98.88 98.13 0.76% 6.36% 6.92% -56
20/05/2019 6 99.38 98.65 0.74% 6.45% 6.98% -53
28/11/2019 5.45 98.13 97.13 1.03% 6.47% 7.01% -54
09/03/2020 6.375 99 98.38 0.63% 6.85% 7.15% -30
14/04/2020 5.8 97.75 97 0.77% 6.85% 7.19% -35
19/06/2020 6.15 98.25 97.55 0.72% 6.91% 7.21% -30
12/04/2021 8.25 103.5 102.88 0.60% 7.05% 7.27% -21
04/10/2022 6.1 96 95.25 0.79% 7.09% 7.28% -19
27/01/2023 6 94.88 94.38 0.53% 7.21% 7.32% -12
22/04/2024 6.65 96.75 96.5 0.26% 7.29% 7.34% -5
04/11/2024 6.25 94.13 93.88 0.27% 7.35% 7.39% -5
03/12/2024 7.00 98 97.75 0.26% 7.37% 7.42% -5
26/02/2025 6.20 93.38 93.13 0.27% 7.40% 7.44% -4
12/06/2025 6.25 93.25 93.13 0.13% 7.44% 7.46% -2
28/11/2026 6.60 94.5 94.13 0.39% 7.45% 7.51% -6
23/03/2027 6.85 95.88 95.5 0.40% 7.47% 7.53% -6
29/11/2027 6.75 94.75 94.38 0.39% 7.51% 7.56% -5
03/11/2028 6.65 93.25 93.25 0.00% 7.57% 7.57% 0
26/02/2030 6.65 92.25 92.5 -0.27% 7.63% 7.60% 3
22/04/2031 7.00 94.38 94.75 -0.39% 7.68% 7.63% 5
23/03/2032 7.00 93.63 93.75 -0.13% 7.74% 7.73% 2
02/11/2035 7.05 93 93.25 -0.27% 7.78% 7.75% 3
23/03/2037 7.25 93.25 93.5 -0.27% 7.94% 7.91% 3

 

 

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