Demand for Lebanese Eurobonds Deteriorated Over the Past 2 Weeks

The BLOM Bond Index (BBI), which tracks the performance of the Lebanese Eurobonds, dropped 0.85%, during the past 2 weeks, to 104.793 points. However, the BBI managed to outperform the JP Morgan Emerging Markets’ Bond Index that lost 1.54%, during the same period, to 663.64 points.

The yields on the Lebanese Eurobonds maturing in 5Y and 10Y gained 10 basis points (bps) and 13 bps to 5.94% and 6.48%, respectively. This was mainly caused by foreigners entering the Lebanese Eurobonds market in a selling-state.

In the US, treasuries rallied, in the course of low inflation and global economic turmoil. The 5Y and 10Y yields dropped 13 bps and 16 bps to 1.37% and 2.05%, respectively. Consequently, the spread between the yields on the 5Y and 10Y Lebanese Eurobonds and their US comparable widened from 434 bps to 457 bps and from 414 bps to 443 bps, respectively.

Emerging markets are perceived to be more risky, amid a slump in oil prices, economic sanctions against Russia, and economic slowdown in China. Lebanon’s 5Y Credit Default Swaps (CDS) widened from 379-406 bps to 405-428 bps. The 5Y CDS quotes of Saudi Arabia and of Dubai broadened from 81-90 bps and 180-194 bps to 119-129 bps and 201-212bps, respectively. As for Turkey and Brazil, their 5Y CDS quotes went up from 264-267 bps and 376-381 bps to 311-315 bps and 460-468 bps, respectively.

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