Despite the overall flat outcome, Lebanon’s Eurobonds market finally took off and recovered in 2014 following 3 years of negative performance. The Lebanese safe assets have proven over the year to be highly correlated with the country’s political and security environment. The relationship binding Lebanon’s Eurobonds market to the local scene was way much stronger than the impact of the international trend driven by the United States (U.S.) Treasuries. Thus, the BLOM Bond Index (BBI) mirrored the local market’s performance and added a mere 0.41% year-on-year (y-o-y) compared to the respective 0.90%, 1.79% and 3.13% yearly losses recorded in 2011, 2012 and 2013.
However, demand for the Lebanese safe assets was partially influenced by the positive performance of the US Treasuries and its implications on the international bond markets in the developing and emerging countries. With political and economic turbulences spreading around the globe, overseas investors preferred investing in U.S. Treasuries on the expense of equity markets and emerging junk bonds. Accordingly, the increasing demand for U.S. Treasuries over the year sent their yields lower with those of the 5Y notes and 10Y bonds decreasing by 10 basis points (bps) and 87 bps to 1.65% and 2.17%, respectively…
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