After the issuance of new Eurobonds maturing in 2025 and 2030 last week, demand for Eurobonds was quite subdued this week. Accordingly, the BLOM Bond Index (BBI) slipped by a weekly 0.14% to 106.85 points. The BBI’s year-to-date performance declined from last week’s 0.86% to 0.72% this week. The BBI outperformed the JP Morgan emerging markets’ bond index, which posted a 0.17% weekly decline to 671.58 points. However, demand on the 5Y and 10Y Lebanese Eurobonds witnessed a small uptick leading by the 5Y and 10Y yields to decrease from 5.27% and 6.18% to 5.26% and 6.10% this week, respectively.
In the US, strong economic fundamentals are pushing investors away from safe-investments such as US Treasuries. In fact, yields on 5Y US notes and 10Y bonds rose from 1.54% and 2.03% to 1.57% and 2.11% this week. Accordingly, the 5Y and 10Y spreads between the yields on Lebanese Eurobonds and their US comparable narrowed from 373 basis points (bps) and 415 bps to 369 bps and 399 bps.
The Lebanese 5Y Credit Default Swaps (CDS) narrowed from last week’s range of 371-394 bps to 372-392 bps. In regional economies, 5 year CDS quotes in Saudi Arabia, Dubai and Brazil all narrowed from 71-79 bps, 198-212 bps and 254-258 bps to 71-76 bps, 190-205 bps and 251-253 bps, respectively. Meanwhile, the 5Y CDS quote in Turkey widened from 189-192 bps last week to 214-217 bps this week.