Demand for Lebanese Eurobonds improved throughout the 2-week festive season, illustrated by the BLOM Bond Index (BBI) increasing by 025% to end the year at 104.11 points. Furthermore, the Lebanese Eurobond Market fared better than bonds in emerging markets, as the BBI outperformed the JP Morgan Emerging Markets’ Bond Index which remained relatively stable at 670.50 points.
The yield on the 5Y Lebanese Eurobonds dropped 6 basis points (bps) to 6.10%, while that of the 10Y fell by 3 bps to 6.67%, over the past two weeks.
The yields on the 5Y and 10Y US treasuries increased by 13 bps and 12 bps to 1.80% and 2.31%, respectively, highlighting the faded demand for safe haven US bonds. This was mainly due to improved investor sentiment for riskier assets following the recent interest rate hike.
Consequently, the spread between the yields on the 5Y and 10Y Lebanese Eurobonds and their US comparable tightened from last week’s 449 bps and 451 bps to 430 bps and 436 bps, respectively.
5 Year Credit Default Swaps, MENA Region
| 30/12/2015 | 18/12/2015 | |
Mid-Price | Mid-Price | |
| Lebanon | 426 | 421 |
| KSA | 153 | 150 |
| Dubai | 234 | 238 |
| Brazil | 501 | 481 |
| Turkey | 270 | 268 |