Lower Demand Seen on Most Eurobonds Markets

During the week ending November 17, activity of the Lebanese Eurobonds followed that of US and Emerging Markets. The BLOM Bond Index (BBI) declined 1.52% over the week to reach 100.89 points. Similarly, the JP Morgan Emerging Markets’ Bond Index lost a weekly 1.31% to reach 732.41 points.

Hence, the yields of the Lebanese Eurobonds maturing in 5Y and 10Y  grew from 6.43% and 7% last week, to 6.74% and 7.32%, respectively.

In the U.S., Treasuries declined, reflecting investors’ conviction that the U.S. will be moving into higher growth, higher inflation and tighter monetary policy driven by the prospect of large fiscal stimulus next year. Hence, the yields on the US treasuries maturing in 5 and 10 years rose from 1.56% and 2.15% last week to 1.73% and 2.29% this week. As for the spread between the yields on the 5 Year and 10 Year Lebanese Eurobonds and their US comparable, they broadened from 487 bps and 485 bps last week to 501 bps and 503 bps this week, respectively.

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

0 17/11/2016 10/11/2016
Lebanon 517 525
KSA 137 137
Dubai 160 154
Brazil 309 305
Turkey 295 288

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