The Government’s formation Increases demand on Lebanese Eurobonds

After 9 months of delay, Lebanon’s government formation has improved Lebanon’s Eurobonds’prices. .In fact, Lebanon’s BLOM Bond Index (BBI) increased this week by 4.89% to reach 92.60 points the highest since more than 5 months. As such, the  yields on  5Y and 10Y Lebanese Eurobonds declined by 147 and 98 basis points (bps) each to reach 9.93% and 9.50%, respectively, this week.

As such, the BBI outperformed the JP Morgan Emerging Markets’ Bond Index (EMBI) this week, as the latter recorded a 0.66% weekly rise to stand at 804.75 points .

In the US, demand for 5 Year and 10 Year US treasuries rose as the Fed ‘s meeting on Wednesday helped the rally in both stocks and bonds. In fact, the US Federal Reserve has voted to leave interest rates on hold, at their current level of up to 2.5% and it will be ‘patient’ before raising interest rates again in 2019. Moreover, the equity market was boosted by strong earnings results from major companies such as Facebook and General Electric .

As a result, the 5Y and 10Y US treasuries’ yields declined from 2.55% and 2.72% last week to 2.43% and 2.63% 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 135 and 89 basis points (bps)  to reach 750 and 687  bps respectively.

 Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 31/01/2019 17/01/2019 Change 31/01/2019 17/01/2019 Change bps
09/03/2020 6.375 95.833 94.5 1.41% 10.45% 11.72% -127
14/04/2020 5.8 94.125 92.38 1.89% 11.14% 12.71% -157
19/06/2020 6.15 93.989 92 2.16% 10.94% 12.53% -160
12/04/2021 8.25 95.183 91.88 3.59% 10.76% 12.54% -179
04/10/2022 6.1 87.84 84 4.57% 10.14% 11.53% -139
27/01/2023 6 88.232 83.25 5.98% 9.62% 11.31% -169
22/04/2024 6.65 87.833 81.88 7.27% 9.67% 11.32% -165
04/11/2024 6.25 84.916 79.25 7.15% 9.73% 11.22% -149
03/12/2024 7.00 84.577 81.5 3.78% 10.61% 11.41% -81
26/02/2025 6.20 85.041 80 6.30% 9.50% 10.76% -126
12/06/2025 6.25 84.584 79.88 5.89% 9.53% 10.67% -114
28/11/2026 6.60 83.791 79.75 5.07% 9.59% 10.44% -85
23/03/2027 6.85 84.667 79.88 5.99% 9.60% 10.59% -98
29/11/2027 6.75 83.833 78.88 6.28% 9.49% 10.47% -97
03/11/2028 6.65 83.083 78.13 6.34% 9.33% 10.24% -91
26/02/2030 6.65 81.833 77.38 5.75% 9.31% 10.08% -77
22/04/2031 7.00 81.833 77.25 5.93% 9.55% 10.31% -76
23/03/2032 7.00 82 77.5 5.81% 9.41% 10.13% -72
02/11/2035 7.05 81.5 77.25 5.50% 9.24% 9.85% -61
23/03/2037 7.25 81.791 77.38 5.70% 9.35% 9.97% -62

 

 

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