Mixed Demand on US Treasuries this week: Investors Await the G20 Summit

Lebanon’s BLOM Bond Index (BBI) slipped by 0.73% over the week ending June 28th 2019 to settle at 88.80 points.

In fact, the demand on the 5 year (5Y) and 10Y Lebanese Eurobonds dwindled over the past week, as their respective yields increased from 11.50% and 10.81%, to 11.82% and 10.92%, respectively. This can be largely attributed to the local negative publicity (TVs and newspapers) regarding the content of Moody’s June 2019 reports, noting that Moody’s  merely affirmed the “Caa1 Stable” rating for Lebanese Government Bonds in its latest reports.

The BBI lagged behind the JP Morgan Emerging Markets’ Bond Index (EMBI) which lost a weekly 0.41% to stand at 851.84 points.

In the US, investors continued to pick up sigsns on possible interest rate cuts in July  while they also anticipate the G20 Summit this weekend may attenuate US-China trade tensions. As a result, the yields on US treasuries over the week sent mixed signs, as yields on 5Y treasuries rose by 2 basis points (bps) to 1.76% while yields on 10Y treasuries stabilized at last week’s 2.01%.

As such, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparables expanded from last week’s 976 and 880 bps, to 1,006 and 891 bps this week.


Weekly Change of Lebanese Eurobonds Prices
 

  Prices Weekly Yields   Weekly
Maturity Coupon in % 27/06/2019 20/06/2019 Change 27/06/2019 20/06/2019 Change bps
12/04/2021 8.25 93.71 94.25 -0.58% 12.25% 11.85% 40
04/10/2022 6.1 84.83 85.67 -0.97% 11.82% 11.44% 37
27/01/2023 6 83.25 83.96 -0.84% 11.87% 11.57% 30
22/04/2024 6.65 81.42 82.38 -1.16% 11.81% 11.49% 32
04/11/2024 6.25 79.38 80.25 -1.09% 11.51% 11.24% 27
03/12/2024 7.00 81.71 82.25 -0.66% 11.63% 11.47% 17
26/02/2025 6.20 78.83 79.75 -1.15% 11.37% 11.09% 27
12/06/2025 6.25 79.50 80.25 -0.93% 11.03% 10.82% 21
28/11/2026 6.60 78.42 78.83 -0.53% 10.92% 10.81% 10
23/03/2027 6.85 78.50 78.96 -0.58% 11.05% 10.94% 11
29/11/2027 6.75 77.42 77.83 -0.53% 10.92% 10.82% 10
03/11/2028 6.65 77.42 77.75 -0.43% 10.50% 10.42% 7
26/02/2030 6.65 76.38 76.67 -0.38% 10.36% 10.30% 6
22/04/2031 7.00 75.89 76.15 -0.33% 10.63% 10.58% 5
23/03/2032 7.00 77.50 78.33 -1.06% 10.19% 10.05% 14
02/11/2035 7.05 75.50 76.13 -0.82% 10.15% 10.05% 10
23/03/2037 7.25 76.42 76.79 -0.49% 10.15% 10.08% 7

 

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