Lebanese Eurobonds Market showed an improvement during the week, as reflected by the BLOM Bond Index that inched up 0.35% during the week to 102.79 points. Nevertheless, the Lebanese Eurobond Market was outperformed by bonds in emerging markets, which is mirrored by the JP Morgan Emerging Markets’ Bond Index that added a weekly 1.58% to 667.62 points.
The yields on the 5Y and 10Y Lebanese Eurobonds dropped by 14 basis points (bps) and 5 bps, during the week, to 6.50% and 6.89%, respectively.
Similarly, demand for US treasuries continued to increase over the week, as shown by the yields on the 5Y and 10Y US treasuries that declined by 4 bps and 2 bps, to 1.40% and 2%, respectively. As oil and stock markets follow bearish trends, investors fear that the increase in inflation rate would not be sustained and hence expect that the Federal Reserve would have to slow the pace of interest rates increase. This was confirmed by the dovish statement of the FOMC, hence pushing demand for Eurobonds higher.
Consequently, the spread between the yields on the 5Y and 10Y Lebanese Eurobonds and their US comparable narrowed to 510 bps and 489 bps, from last week’s 520 bps and 492 bps, respectively.
5 Year Credit Default Swaps, MENA Region