Contrasting Eurobonds Markets in Lebanon and in the US

Demand for the Lebanese Eurobonds fell over the past week, as reflected by the BLOM Bond Index (BBI) which lost 0.34% to reach 103.65 points.

The BBI outperformed the JP Morgan Emerging Markets’ Bond Index which lost a weekly 0.72% to 725.57 points.

Demand for Lebanese Eurobonds maturing in 5 years and 10 years declined over the past week with their yields rising from 6.13% and 6.73% to 6.15% and 6.78%, respectively.

 After the Federal Reserve held rates unchanged and after the Bank of Japan refrained from adding new stimulus, investors rushed towards safe-haven assets. The 5Y and 10Y yields for US treasuries dropped from last week’s 1.23% and 1.71% to 1.1% and 1.57%, respectively.

Therefore, the spread between the yields on the 5Y and 10Y Lebanese Eurobonds and their US comparable widened from 490 bps and 502 bps to 505 bps and 521 bps, respectively.  

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

  16/06/2016 08/06/2016
Lebanon 473 457
KSA 185 170
Dubai 217 211
Brazil 347 334
Turkey 264 248

 

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