The BLOM Bond Index (BBI) rose by a weekly 1.87%, ending this week at 91.41 points.Also, the JP Morgan Emerging Markets’ Bond Index (EMBI) increased by a marginal 1.03% to end the week at 820.76 points. As such, the demand on 5 year (5Y) and 10Y Lebanese Eurobonds grew over the week, as their respective yields dropped from 10.93% and 10.25% to 10.08% and 10.01%, respectively.
In the US, the demand for 5 Year and 10 Year US treasuries increased, driving yields lower by 9 basis point(bps) each to reach 2.34% and 2.54%, respectively.
In details,the yields on the 5Y and 10Y US treasuries fell to their lowest levels since the start of the year after the Federal reserve held interest rates steady and signaled little appetite for raising them again in 2019. The Fed also signaled signs of weakness in business investment and consumer spending areas, and downgraded its economic forecast for the US economy , expecting a 2.1 percent growth this year, down from the 2.3 percent it forecast in December and projecting growth of just 1.9 percent in 2020.
The investors in turn , worried about the economic outlook and viewed the move as more restrained than expected , US treasury yields were dragged lower as a result.
Accordingly, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and its US comparable narrowed from 850 and 762 basis points (bps) last week to 774 and 757 bps this week .
5 Year Credit Default Swaps, Mid-Prices (in basis points)
22/03/2019 | 15/03/2019 | |
Lebanon | 791 | 748 |
KSA | 84 | 79 |
Dubai | 125 | 123 |
Brazil | 163 | 156 |
Turkey | 352 | 321 |
Weekly Change of Lebanese Eurobonds Prices
Prices | Weekly | Yields | Weekly | ||||
Maturity | Coupon in % | 21/03/2019 | 14/03/2019 | Change | 21/03/2019 | 14/03/2019 | Change bps |
3/9/2020 | 6.375 | 97.13 | 95 | 2.24% | 9.56% | 10.69% | -113 |
4/14/2020 | 5.8 | 95.63 | 93.63 | 2.14% | 10.24% | 10.95% | -71 |
6/19/2020 | 6.15 | 95.25 | 93.25 | 2.14% | 10.31% | 11.03% | -72 |
4/12/2021 | 8.25 | 95.25 | 93.25 | 2.14% | 10.88% | 11.59% | -71 |
10/4/2022 | 6.1 | 88.50 | 84.88 | 4.26% | 10.05% | 11.04% | -99 |
1/27/2023 | 6 | 87.13 | 83 | 4.98% | 10.12% | 11.23% | -112 |
4/22/2024 | 6.65 | 86.25 | 81.38 | 5.98% | 10.18% | 11.36% | -119 |
11/4/2024 | 6.25 | 83.38 | 78.75 | 5.88% | 10.21% | 11.26% | -106 |
12/3/2024 | 7.00 | 86.38 | 81.75 | 5.66% | 10.21% | 11.27% | -106 |
2/26/2025 | 6.20 | 83.50 | 77.63 | 7.56% | 9.95% | 11.29% | -134 |
6/12/2025 | 6.25 | 83.25 | 77.5 | 7.42% | 9.92% | 11.20% | -129 |
11/28/2026 | 6.60 | 82.13 | 76.25 | 7.71% | 9.98% | 11.17% | -119 |
3/23/2027 | 6.85 | 82.75 | 77 | 7.47% | 10.04% | 11.17% | -113 |
11/29/2027 | 6.75 | 81.38 | 75.75 | 7.43% | 10.01% | 11.08% | -107 |
11/3/2028 | 6.65 | 80.50 | 74.25 | 8.42% | 9.83% | 10.97% | -114 |
2/26/2030 | 6.65 | 78.50 | 72.75 | 7.90% | 9.91% | 10.92% | -100 |
4/22/2031 | 7.00 | 78.50 | 73.38 | 6.98% | 10.12% | 10.98% | -86 |
3/23/2032 | 7.00 | 79.50 | 73.13 | 8.71% | 9.83% | 10.86% | -104 |
11/2/2035 | 7.05 | 78.75 | 72.38 | 8.80% | 9.64% | 10.59% | -95 |
3/23/2037 | 7.25 | 79.25 | 72.63 | 9.11% | 9.71% | 10.68% | -97 |