A Slight Recovery in the Prices of Lebanese Eurobonds this Week

 Lebanon’s BLOM Bond Index (BBI) recuperated this week, climbing by 2.85% to reach 91.25 points. It surpassed the JP Morgan Emerging Markets’ Bond Index (EMBI) which recorded a weekly 0.81% uptick to stand at 771.5 points.

Yields on the 5 year (5Y) and 10Y Lebanese Eurobonds retreated from last week’s 10.02% and 10.47% to 9.3% and 9.8% to this week, respectively.

It is also worthy to note that the Lebanese Government 5Y Credit Default Swap (CDS) began to normalize this week, after having peaked last week primarily as a result of an oversupply of Eurobonds.

In the US, the yields on the 5Y and 10Y treasury bills remained almost unchanged. While the yields on 5Y bill increased incrementally from 2.73% to 2.74% this week, the yields on the 10Y bills remained at 2.84% by the week ending July 6th.

In fact, US yields rose in the beginning of the week on the back of better-than- expected US domestic manufacturing data for June 2018 (knowing that manufacturing accounts for 12% of the U.S. economy). However, throughout the week, demand on US treasuries heightened owing it to investors’ concerns over trade wars, as the Trump administration announced the tariffs imposed on China are set to be effective starting July 7, 2018.

Accordingly, the 5Y and 10Y spreads between the yield on the Lebanese Eurobonds and their US comparable narrowed from last week’s 729 basis points (bps) and 763 bps to 656 bps and 696 bps, respectively.

 

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 05/07/2018 28/06/2018 Change 05/07/2018 28/06/2018 Change bps
28/11/2019 5.45 97.13 96.5 0.65% 7.65% 8.11% -46
09/03/2020 6.375 97.13 96.5 0.65% 8.23% 8.63% -39
14/04/2020 5.8 96 95.25 0.79% 8.26% 8.71% -45
19/06/2020 6.15 96.13 95.25 0.92% 8.33% 8.82% -49
12/04/2021 8.25 98.25 96 2.34% 8.97% 9.92% -95
04/10/2022 6.1 88.75 86.5 2.60% 9.37% 10.06% -70
27/01/2023 6 87.38 84.75 3.10% 9.47% 10.25% -78
22/04/2024 6.65 87 84.38 3.11% 9.62% 10.28% -66
04/11/2024 6.25 84.13 81.5 3.23% 9.66% 10.29% -63
03/12/2024 7.00 87.5 84.75 3.24% 9.66% 10.30% -64
26/02/2025 6.20 83.25 80 4.06% 9.67% 10.44% -76
12/06/2025 6.25 82.88 79.88 3.76% 9.70% 10.38% -69
28/11/2026 6.60 82.5 78.88 4.59% 9.69% 10.43% -74
23/03/2027 6.85 83.5 79.38 5.19% 9.69% 10.51% -82
29/11/2027 6.75 82.13 78.5 4.62% 9.69% 10.38% -69
03/11/2028 6.65 80.38 76.38 5.24% 9.70% 10.43% -74
26/02/2030 6.65 78.88 76.63 2.94% 9.72% 10.10% -39
22/04/2031 7.00 79.63 77 3.42% 9.83% 10.26% -43
23/03/2032 7.00 78.88 76.5 3.11% 9.83% 10.22% -38
02/11/2035 7.05 78.25 76 2.96% 9.66% 9.99% -33
23/03/2037 7.25 79 76.5 3.27% 9.70% 10.06% -36

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