Falling Eurozone Bond Yields & Geopolitical Tensions with Iran Increase Demand on US Treasuries

The BLOM Bond Index (BBI) declined by 1.41% to end the week at 96.62 points. It was surpassed by the JP Morgan Emerging Markets’ Bond Index (EMBI) which slid by 1.19% over the week ending Apr.5, 2018, to close at 772.95 points.

Yields on the 5 year (5Y) Lebanese Eurobonds remained unchanged at 7.75% this week. Meanwhile, demand on the 10Y Lebanese Eurobonds remained shy as the yields slightly slipped during the week from 8.51% to 8.48%.

In the USA, the FED left interest rates unchanged as expected this Wednesday. However, U.S. yields were pulled down this week by the falling bond yields in the Eurozone where inflation data stalled in April. Moreover, investors opted for US treasuries amid the growing geopolitical tensions between Iran, the US and EU, as Iran’s Mohammed Zarif announced the country is not willing to renegotiate the terms of its nuclear deal with its counterparts next week.

Accordingly, the yields on the 5Y and 10Y US treasuries fell from 2.82% and 3.00% to 2.78% and 2.94%, respectively.

In its turn, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and its US comparable widened from 493 basis points (bps) and 551 bps to 497 bps and 554 bps, respectively.  

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 03/05/2018 26/04/2018 Change 03/05/2018 26/04/2018 Change bps
20/05/2019 6 99.38 99.88 -0.50% 6.62% 6.11% 51
28/11/2019 5.45 98.13 98.8 -0.68% 6.72% 6.25% 47
09/03/2020 6.375 98.88 99.63 -0.75% 7.02% 6.58% 44
14/04/2020 5.8 97.63 98.5 -0.88% 7.12% 6.62% 50
19/06/2020 6.15 98 98.88 -0.89% 7.17% 6.71% 46
12/04/2021 8.25 101.25 103 -1.70% 7.76% 7.11% 65
04/10/2022 6.1 93.75 95.5 -1.83% 7.80% 7.30% 50
27/01/2023 6 92.88 94.63 -1.85% 7.83% 7.36% 47
22/04/2024 6.65 93.25 95.5 -2.36% 8.10% 7.60% 50
04/11/2024 6.25 90.75 92.88 -2.29% 8.11% 7.66% 45
03/12/2024 7.00 94.38 96.25 -1.94% 8.12% 7.73% 39
26/02/2025 6.20 90 91.75 -1.91% 8.14% 7.78% 36
12/06/2025 6.25 89.75 91.63 -2.05% 8.18% 7.80% 38
28/11/2026 6.60 89 90.5 -1.66% 8.43% 8.16% 27
23/03/2027 6.85 90 91 -1.10% 8.47% 8.30% 17
29/11/2027 6.75 88.75 89.88 -1.26% 8.49% 8.30% 19
03/11/2028 6.65 87.25 88.5 -1.41% 8.51% 8.31% 20
26/02/2030 6.65 86.25 87 -0.86% 8.52% 8.40% 12
22/04/2031 7.00 87.75 89 -1.40% 8.58% 8.41% 17
23/03/2032 7.00 87.13 88.63 -1.69% 8.60% 8.40% 20
02/11/2035 7.05 86 87.63 -1.86% 8.61% 8.41% 20
23/03/2037 7.25 87.25 88.75 -1.69% 8.63% 8.45% 18

 

 

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