The Lebanese Eurobonds Market Improves This Week

Lebanon’s BLOM Bond Index (BBI) increased this week by 5.64% to reach 88.28 points.  As such, the  yields on  5Y and 10Y Lebanese Eurobonds declined by 155 and 112 basis points (bps) each to reach and 11.40% and 10.48%, respectively, this week. In fact, the BBI recovered from last week’s losses, as Qatar’s foreign minister stated that his country is willing to buy $500 million of Lebanese government bonds to support the Lebanese economy. Moreover, news on the potential formation of a new government boosted investors’ confidence this week.

As such, the BBI outperformed the JP Morgan Emerging Markets’ Bond Index (EMBI) this week, as the latter recorded a 1.40% weekly rise to stand at 799.47 points .

In the US, demand for 5 Year and 10 Year US treasuries increased due to multiple developments this week. In fact, investors’ concerns increased owing it to the longest US government shutdown which could trigger a slowdown in US growth.In addition,  the IMF cut its global growth rates for 2019 to 3.5% from 3.7%, amid concerns about ongoing trade negotiations between Washington and Beijing. Moreover, investors’ appetite for US treasuries grew, after the European Central Bank President Mario Draghi highlighted a weaker outlook for economic growth  in the Eurozone.

As a result, the 5Y and 10Y US treasuries’ yields declined from 2.58% and 2.75% last week to 2.55% and 2.72% this week, respectively. In its turn, the 5Y spread and 10Y spread between the yield on the Lebanese Eurobonds and their US couterparts narrowed weekly by 152 and 109 basis points (bps)  to reach 885 and 776  bps respectively.

 

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

 

  24/01/2019 17/01/2019
Lebanon 798 897
KSA 89 96
Dubai 128 135
Brazil 172 180
Turkey 318 351

 Weekly Change of Lebanese Eurobonds Prices

 

  Prices Weekly Yields   Weekly
Maturity Coupon in % 1/17/2019 1/10/2019 Change 1/17/2019 1/10/2019 Change bps
3/9/2020 6.375 90.5 93 -2.69% 15.74% 13.03% 271
4/14/2020 5.8 89.25 92.25 -3.25% 15.63% 12.62% 301
6/19/2020 6.15 89.25 91.63 -2.60% 14.80% 12.68% 212
4/12/2021 8.25 88.5 91.63 -3.42% 14.43% 12.61% 182
10/4/2022 6.1 79.88 83 -3.76% 13.11% 11.86% 125
1/27/2023 6 79.13 81.63 -3.06% 12.79% 11.84% 95
4/22/2024 6.65 77.65 80.38 -3.40% 12.58% 11.73% 85
11/4/2024 6.25 75.25 77.5 -2.90% 12.35% 11.68% 66
12/3/2024 7.00 78.13 80.38 -2.80% 12.34% 11.69% 64
2/26/2025 6.20 75.25 77 -2.27% 12.03% 11.53% 50
6/12/2025 6.25 75 76.75 -2.28% 11.94% 11.46% 48
11/28/2026 6.60 74.38 75.5 -1.48% 11.66% 11.39% 27
3/23/2027 6.85 74.63 76.25 -2.12% 11.76% 11.37% 38
11/29/2027 6.75 73.63 74.88 -1.67% 11.58% 11.30% 28
11/3/2028 6.65 72.75 73.75 -1.36% 11.32% 11.11% 22
2/26/2030 6.65 72.63 73 -0.51% 10.97% 10.89% 8
4/22/2031 7.00 72.63 73.38 -1.02% 11.14% 11.00% 14
3/23/2032 7.00 72.5 73.5 -1.36% 11.00% 10.81% 18
11/2/2035 7.05 72.25 72.63 -0.52% 10.62% 10.56% 6
3/23/2037 7.25 72.38 73 -0.85% 10.73% 10.63% 10

 

 

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