Higher US Treasury Yields Amid Positive GDP Data Report

The BLOM Bond Index (BBI) ended the week at 93.37 points, declining  weekly by 0.60% while the JP Morgan Emerging Markets’ Bond Index (EMBI) gained a marginal 0.55% to end the week at 809.76 points.  As such, the demand on 5 year (5Y) and 10Y Lebanese Eurobonds retreated over the week, as their respective yields grew from 9.29% and 9.35% to 9.51% and 9.46%, respectively.

In the US, the demand for 5 Year and 10 Year US treasuries retreated, driving yields higher by 1 basis point(bp) and 4 bps to reach 2.52% and 2.73%, respectively. The decline in demand can be linked to the release of gross domestic product report for the fourth quarter showing that the economy grew by an annualized 2.6% in the fourth quarter and by over 3% for the full year for the first time since 2005. Worth mentioning that on Tuesady, the 5 Year and 10 Year US treasuries yields witnessed an important decline to settle at 2.45% and 2.64%, respectively mainly due to the statement of Fed Chair Jerome Powell in which he said that the US economy can be affected by the economic slowdown in China, Japan and Eurozone.

Accordingly, the 5Y spread between the yield on the Lebanese Eurobonds and its US comparable narrowed from 678 basis points (bps) last week to 677 bps. Meanwhile, the 10Y spread widened from 666 bps last week to 673 bps this week.

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

 

28/02/2019 21/02/2019
Lebanon 688 697
KSA 84 89
Dubai 125 127
Brazil 156 166
Turkey 305 322

 Weekly Change of Lebanese Eurobonds Prices

 

  Prices Weekly Yields   Weekly
Maturity Coupon in % 28/02/2019 21/02/2019 Change 28/02/2019 21/02/2019 Change bps
09/03/2020 6.375 95 97.466 -2.53% 10.69% 8.95% 174
14/04/2020 5.8 93.63 96.368 -2.84% 10.95% 9.20% 176
19/06/2020 6.15 93.25 96.181 -3.05% 11.03% 9.26% 177
12/04/2021 8.25 93.25 97.172 -4.04% 11.59% 9.73% 186
04/10/2022 6.1 84.88 90.399 -6.11% 11.04% 9.28% 176
27/01/2023 6 83 89.346 -7.10% 11.23% 9.29% 194
22/04/2024 6.65 81.38 88.27 -7.81% 11.36% 9.58% 179
04/11/2024 6.25 78.75 86.256 -8.70% 11.26% 9.42% 185
03/12/2024 7.00 81.75 88.025 -7.13% 11.27% 9.75% 151
26/02/2025 6.20 77.63 85.829 -9.55% 11.29% 9.33% 196
12/06/2025 6.25 77.5 86.182 -10.07% 11.20% 9.18% 202
28/11/2026 6.60 76.25 85.764 -11.09% 11.17% 9.20% 197
23/03/2027 6.85 77 85.722 -10.17% 11.17% 9.41% 176
29/11/2027 6.75 75.75 84.722 -10.59% 11.08% 9.34% 174
03/11/2028 6.65 74.25 83.479 -11.06% 10.97% 9.27% 171
26/02/2030 6.65 72.75 81.872 -11.14% 10.92% 9.32% 160
22/04/2031 7.00 73.38 81.2 -9.63% 10.98% 9.66% 132
23/03/2032 7.00 73.13 81.922 -10.73% 10.86% 9.43% 143
02/11/2035 7.05 72.38 81.742 -11.45% 10.59% 9.21% 138
23/03/2037 7.25 72.63 81.733 -11.14% 10.68% 9.36% 132

 

 

 

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