BBI Down this Week due to Continuous Political Turmoil  

 

The delay in the Lebanese cabinet formation has weighed down on the BLOM Bond Index (BBI). In fact, the BBI retreated this week, falling by 2.15% to reach 91.46 points. The JP Morgan Emerging Markets’ Bond Index (EMBI) surpassed this week’s BBI, recording a 0.26% weekly uptick to stand at 779.6 points.

As such, the yields on the 5 year (5Y) and 10Y Lebanese Eurobonds surged from last week’s 8.85% and 9.20% to end the week at 9.45% and 9.69%, respectively.

In the US, the yields on the 5Y and 10Y treasury bills remained almost unchanged, falling only 1 basis point each to 2.74% and 2.84%, respectively, by the week ending July 19th. In fact, demand on treasuries increased due to the disappointing quarterly financial results of major firms, as well as, Trump’s disapproval of the Fed rate tightening policy.

Accordingly, the 5Y and 10Y spreads between the yield on the Lebanese Eurobonds and their US comparable wiedened from last week’s 610 basis points (bps) and 635 bps to 671 bps and 685 bps, respectively.

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

 

  19/07/2018 12/07/2018
Lebanon 645 603
KSA 88 85
Dubai 130 127
Brazil 340 249
Turkey 314 329

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 19/07/2018 12/07/2018 Change 19/07/2018 12/07/2018 Change bps
28/11/2019 5.45 97.63 98.13 -0.51% 7.31% 6.89% 42
09/03/2020 6.375 97.38 98.13 -0.76% 8.11% 7.59% 52
14/04/2020 5.8 96.25 97 -0.77% 8.15% 7.65% 50
19/06/2020 6.15 96.38 97.13 -0.77% 8.23% 7.77% 46
12/04/2021 8.25 97.75 99.25 -1.51% 9.19% 8.55% 64
04/10/2022 6.1 88.38 90.25 -2.07% 9.51% 8.91% 60
27/01/2023 6 86.75 89 -2.53% 9.69% 9.00% 69
22/04/2024 6.65 86.75 89 -2.53% 9.70% 9.14% 56
04/11/2024 6.25 84 86.25 -2.61% 9.70% 9.16% 54
03/12/2024 7.00 87.25 89.63 -2.66% 9.73% 9.18% 55
26/02/2025 6.20 83.13 85.38 -2.64% 9.72% 9.19% 53
12/06/2025 6.25 82.88 85.13 -2.64% 9.71% 9.20% 51
28/11/2026 6.60 82.63 85.13 -2.94% 9.67% 9.18% 49
23/03/2027 6.85 83.63 86.13 -2.90% 9.68% 9.20% 48
29/11/2027 6.75 82.25 84.88 -3.10% 9.67% 9.19% 48
03/11/2028 6.65 80.63 83.25 -3.15% 9.66% 9.20% 46
26/02/2030 6.65 79.38 82 -3.20% 9.64% 9.20% 44
22/04/2031 7.00 80.88 83.13 -2.71% 9.63% 9.28% 35
23/03/2032 7.00 80.38 82.5 -2.57% 9.60% 9.28% 32
02/11/2035 7.05 79.75 82 -2.74% 9.45% 9.14% 31
23/03/2037 7.25 80.75 83.25 -3.00% 9.46% 9.13% 33

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