The recovery in the Blom Bond Index is partial: yields remain high

 In the week ending Oct. 5th, Lebanon’s BLOM Bond Index (BBI) rose by 1.53% to settle at 88.39 points. The BBI continued its recovery which started last week, after the index recorded losses throughout September. In fact, the political deadlock regarding the government’s formation had particularly shaken investors’ confidence while growth in the country’s key economic indicators also stalled. Accordingly, the demand increased on 5Y and 10Y Eurobonds, which capped the respective yields at 10.48% and 10.40% this week, down from last week’s 10.77% and 10.76%. However the recovery in the index is still an incremental one, as the 5Y and 10Y yields remain at the high thresholds, compared to 6.10% and 6.91%, respectively, on October 4, 2017.

Comparing Lebanon’s performance to that of emerging markets’ bond markets, it seems the BBI outpaced the JP Morgan Emerging Markets’ Bond Index (EMBI) this week, with the latter recording a 1.14% downtick weekly uptick to stand at 771.11 points.

In the US, strong economic data released this week sent yields to highs of 3.05% and 3.19%, up from 2.96% and 3.06%, respectively. In details, claims for unemployment benefits dropped in Sept. 2018 as per the US Labor Department Thursday. Moreover, data on factory orders rebounded, adding 2.3%, the largest increase since September 2017.

As such, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and their US counterparts narrowed by 38 and 49 basis points (bps)  to reach 743 and 721 bps, respectively.

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 04/10/2018 27/09/2018 Change 04/10/2018 27/09/2018 Change bps
28/11/2019 5.45 95.25 94.63 0.66% 9.91% 10.43% -52
09/03/2020 6.375 95.25 94.5 0.79% 10.01% 10.56% -55
14/04/2020 5.8 93.88 93.25 0.68% 10.23% 10.64% -42
19/06/2020 6.15 93.63 93 0.68% 10.30% 10.68% -38
12/04/2021 8.25 94.50 93.88 0.66% 10.80% 11.07% -28
04/10/2022 6.1 86.00 85.13 1.02% 10.47% 10.75% -28
27/01/2023 6 85.13 84.25 1.04% 10.36% 10.62% -27
22/04/2024 6.65 83.88 82.5 1.67% 10.56% 10.92% -36
04/11/2024 6.25 81.13 80 1.41% 10.53% 10.81% -28
03/12/2024 7.00 84.00 82.5 1.82% 10.60% 10.97% -37
26/02/2025 6.20 80.50 79 1.90% 10.45% 10.82% -37
12/06/2025 6.25 80.25 78.88 1.74% 10.42% 10.74% -32
28/11/2026 6.60 79.38 77.75 2.10% 10.41% 10.76% -35
23/03/2027 6.85 80.00 78.13 2.39% 10.47% 10.86% -39
29/11/2027 6.75 78.88 77.13 2.27% 10.38% 10.73% -35
03/11/2028 6.65 77.50 75.25 2.99% 10.29% 10.72% -43
26/02/2030 6.65 76.38 74.5 2.52% 10.20% 10.54% -34
22/04/2031 7.00 76.63 75 2.17% 10.37% 10.65% -28
23/03/2032 7.00 76.50 74.75 2.34% 10.26% 10.55% -29
02/11/2035 7.05 76.13 74.5 2.19% 9.99% 10.24% -25
23/03/2037 7.25 76.88 74.88 2.67% 10.02% 10.32% -30

 

 

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