Demand for Eurobonds was subdued during the week as no significant political breakthroughs were witnessed. This was mirrored by the performance of the BLOM Bond Index (BBI) that slightly ticked down by a weekly 0.08% to 106.54 points, cutting its year-to-date gains by 0.43%. Consequently, the yields on the 5Y and 10Y notes respectively increased by 2 basis points (bps) and 4 bps to 5.37% and 6.17%.
Furthermore, JP Morgan emerging markets’ bond index managed to outperform the Lebanese Eurobonds market, posting a 0.13% weekly increase to 666.60 points.
The demand for medium and long-term US securities surged as reports linger over decreasing possibility of interest rate rise before the turn of the year. In turn, the yields on 5Y and 10Y US treasuries edged down by 11 bps and 12bps to 1.48% and 1.98%, respectively. Thus, with lower demand on Lebanese treasuries, the 5Y and 10Y spreads between the yields on Lebanese Eurobonds and their US comparable broadened by respective 13 bps and 16 bps to 389 bps and 419 bps.
Lebanese 5Y Credit Default Swaps (CDS) narrowed from 372-392 bps to 370-390 bps. In regional economies, 5 year CDS quotes of Saudi Arabia and Dubia relatively remained steady going from 70-77 bps and 200-213 bps last week to 69-76 bps and 201-213 bps, respectively. On the other hand, Brazil’s 5Y CDS quote broadened from 289-294 bps to 303-308 bps while that of Turkey narrowed from 213-217 bps to 207-210 bps this week.