Demand for Lebanese Eurobonds regressed through the first week of 2016, illustrated by the BLOM Bond Index (BBI) decreasing by 0.26% to 103.84 points. Furthermore, the Lebanese Eurobond Market fared worse than bonds in emerging markets, as the BBI was outperformed by the JP Morgan Emerging Markets’ Bond Index, which fell by a weekly 0.14% to 669.54 points.
The yield on the 5Y Lebanese Eurobonds went up by 10 basis points (bps) to 6.20%, while that of the 10Y augmented by 5 bps to 6.72%, over the past week.
The yields on the 5Y and 10Y US treasuries declined by 19 bps and 15 bps to 1.61% and 2.16%, respectively, highlighting the increased demand for safe haven US bonds. This was mainly due to the downturn in Chinese Equities as investors are turning to safer investments.
Consequently, the spread between the yields on the 5Y and 10Y Lebanese Eurobonds and their US comparable broadened from last week’s 430 bps and 436 bps to 459 bps and 456 bps, respectively.
5 Year Credit Default Swaps, MENA Region
| 07/01/2016 | 30/12/2015 | |
| Mid-Price | Mid-Price | |
| Lebanon | 430 | 426 |
| KSA | 188 | 153 |
| Dubai | 266 | 234 |
| Brazil | 485 | 501 |
| Turkey | 294 | 270 |