Foreign Decline Demand of Lebanese Eurobonds Held Back the BBI Throughout the Week

Demand for Lebanese Eurobonds weakened throughout the week amidst foreign sell off of medium and long term notes. This was illustrated by the BLOM Bond Index (BBI) which decreased by 0.79% to 103.02 points. However, the Lebanese Eurobond Market fared better than bonds in emerging markets, as the BBI outperformed the JP Morgan Emerging Markets’ Bond Index, which fell by a weekly 1.15% to 661.84 points.

The yield on the 5Y Lebanese Eurobonds went up by 20 basis points (bps) to 6.40%, while that of the 10Y augmented by 12 bps to 6.84%, over the past week.

The yields on the 5Y and 10Y US treasuries declined by 9 bps and 6 bps to 1.52% and 2.10%, respectively, highlighting the increased demand for safe haven US bonds. There has been a continued downturn in Chinese Equities with  investors are turning to safer placements, coupled with poor U.S. jobless claims over the past week.

Consequently, the spread between the yields on the 5Y and 10Y Lebanese Eurobonds and their US comparable broadened from last week’s 459 bps and 456 bps to 488 bps and 474 bps, respectively.  

5 Year Credit Default Swaps, MENA Region

  14/01/2016 07/01/2016
Mid-Price Mid-Price
Lebanon 442 430
KSA 196 188
Dubai 294 266
Brazil 488 485
Turkey 303 294

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