Lebanese Eurobonds Saw Higher Demand this Week

Demand for Lebanese Eurobonds increased over the week, as revealed by the BLOM Bond Index (BBI) that added 0.08% over the week to 103.75 points.

Hence, the Lebanese gauge could not outperform the JP Morgan Emerging Markets’ Bond Index, which increased by a faster pace of 1.53% to 715.47 points.

The higher demand for medium- and long-term maturities pushed the yields on the 5Y and 10Y Lebanese Eurobonds down by 7 basis points (bps) and 1 bps to 6.14% and 6.72%, respectively.

Worth noting, the Lebanese government announced today a coming Eurobonds issuance in USD, for 2 maturities, April 2024 and April 2031. The yield on the 8Y notes ranges between 6.60%-6.75%, while that of the 15Y notes is between 6.95%-7.10%. The lead managers of this issuance are BLOM Bank S.A.L, Byblos Bank S.A.L, and Deutsche Bank.

In contrast, demand for US treasuries declined over the week. Investors moved towards risky assets as oil prices increased and as they expect that the Federal Reserve will implement 2 interest rate hikes this year, the first of which is forecasted to occur in June. Hence, the5Y and 10Y yields in the US increased to 1.26% and 1.80% from last week’s rates of 1.14% and 1.70%, respectively.

Therefore, the spread between the yields on the 5Y and 10Y Lebanese Eurobonds and their US comparable narrowed by 19 bps and 11 bps to end the week at 488 bps and 492 bps, respectively.  

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

15/04/2016 08/04/2016
Lebanon 455 464
KSA 144 156
Dubai 211 223
Brazil 338 400
Turkey 243

272

 

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