The Lebanese Eurobonds Market weakened during the week, amidst security turbulences. The BLOM Bond Index (BBI) dropped 0.25%, to settle at 108.25 points, with a 2.47% gain since year start. Low demand on medium and long-term maturities pushed 5Y and 10Y yields on the Lebanese Eurobonds up by 5 basis points (bps) and 6 bps to 5.17% and 6.18%, respectively.
Demand on emerging market bonds fell as investors fear that slumping oil prices will hurt government efforts to reduce fiscal deficit. This lead the JP Morgan Emerging Countries’ bond index to drop by 2.71% to 658.16 points.
In the U.S, outlook for slow inflation shifted investors’ appetite towards long-term maturities. The 5Y yield added 3 bps to 1.62%, while that of 10Y lost 6 bps to 2.19%, respectively. Correspondingly, the 5Y and 10Y spreads between the Lebanese Eurobonds and their U.S benchmark broadened by 2 bps and 12 bps to 355 bps and 399 bps, respectively.
In Lebanon, the 5Y CDS added 27 bps to 377-407 bps this week. Likewise the 5Y CDS of Dubai broadened from 175-185 bps to 198-212 bps, while that of Saudi Arabia stayed constant at 65-75 bps. Internationally, the 5Y CDS of Turkey went up from 156-159 bps to 175-178 bps, while that of Brazil stood at 191-193 bps compared to last week’s quote of 156-159 bps.