Low Demand on 5Y and 10Y Maturities Push Prices of Lebanese Eurobonds Down This Week

Demand for Eurobonds was frail during the week. This was mirrored by the yields on the 5Y and 10Y Lebanese Eurobonds which augmented by 6 basis points (bps) and 3 bps to 5.32% and 6.13%, respectively. Consequently, the BLOM Bond Index (BBI) ticked down by a weekly 0.20% to 106.63 points, cutting its year-to-date gains by 0.52%.

Even though the BBI experienced a downturn during the week, it managed to outperform the JP Morgan emerging markets’ bond index, which posted a 0.87% weekly decline to 665.71 points.

In the US, future deflationary expectations pushed investors towards long term debt securities, leading to a higher demand for 10Y notes and lower demand for 5Y notes. The yield on 5Y US treasuries edged up from 1.57% to 1.59%, while that of 10Y lost 1 bp to 2.10%, this week. Hence, with the lower demand on Lebanese treasuries, the 5Y and 10Y spreads between the yields on Lebanese Eurobonds and their US equivalent broadened by 4 bps each to 373 bps and 403 bps, respectively.

The Lebanese 5Y Credit Default Swaps (CDS) remained unchanged at 372-392 bps.

In regional economies, 5 year CDS quotes of Saudi Arabia, and Turkey relatively remained steady going from 71-76 bps and 214-217 bps to 70-77 bps to 213-217 bps, respectively. On the other hand, Dubai and Brazil 5Y CDS quotes broadened from 190-205 bps and 251-253 bps to 200-213 bps and 289-294 bps, respectively.

Leave a Reply

Your email address will not be published. Required fields are marked *