Demand for Lebanese Eurobonds Slightly Improved this Week

Although most maturities saw higher demandthis week, the Lebanese Eurobonds could not maintain their 3-week momentum. Very long-term maturities (maturing in 14 years and above) pushed down the BLOM Bond Index (BBI) by a weekly 0.16% to 103.50 points.

Hence, the Lebanese gauge could not outperform the JP Morgan Emerging Markets’ Bond Index, which also declined at a slower pace of 0.14% to 704.68 points.

As the demand for medium and long-term Eurobonds increased, the yields for the 5Y and 10Y Lebanese Eurobonds decreased by 4 basis points (bps) and 3 bps to 6.21% and 6.73%, respectively.

Similarly, demand for US treasuries increased over the week, as investors rushed to safe assets amid concerns over the global economic outlook. Moreover, weaker expectations of an interest rate hike also pulled the demand for US treasuries up. Hence, the 5 Year and 10 Year yields in the US decreased from 1.21% and 1.78% to 1.14% and 1.70%, respectively.

Therefore, the spread between the yields on the 5Y and 10Y Lebanese Eurobonds and their US comparable broadened by 3 bps and 5 bps to end the week at the 507 bps and 503 bps, respectively.  

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

08/04/2016 31/03/2016
Lebanon 464 462
KSA 156 154
Dubai 223 208
Brazil 400 367
Turkey 272 255

 

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