Mixed Performance on Lebanese Eurobonds Market Amid Difficult Economic Situation

Lebanon’s BLOM Bond Index (BBI) compiled by BLOMInvest Bank recorded a weekly increase by  0.66% in the week ending November 08, 2019, to settle at 63.85 points. Meanwhile, JP Morgan Emerging Markets’ Bond Index (EMBI) witnessed a downtick of 0.43% to close the week at 863.27 points.

The Lebanese Eurobonds market performance witnessed fluctuations during the week. In fact, Lebanon is currently witnessing a series of protests  which started on Oct. 17th 2019 and have led to the resignation of Prime Minister Saad Hariri putting  pressure on the Lebanese economy. Moreover, Moody’s downgraded the Government of Lebanon’s issuer ratings to Caa2 from Caa1 noting that the ratings remain on review for further downgrade in the next 3 months. As such the 5 year (5Y) Lebanese Eurobonds yields retreated from 25.88% to 25.74%. Meanwhile, the 10 year (10Y) Lebanese Eurobonds yields rose from 17.18% to 17.20%.

In the US, treasury yields witnessed a significant increase and investors appetite for risky assets rose following developments on the international US-China trade front. In fact, the demand for bonds retreated amid news reporting that the U.S. might  cancel existing tariffs  on $111B of Chinese imports that had been imposed on Sept. 1 in order to finalize the so-called “phase one” deal. Moreover, the equity market advanced on Thursday as energy, communication services and financials led stocks to record highs. As such, the yields on 5Y and 10Y US treasuries surged from 1.51% and 1.69% to 1.74% and 1.92% (the highest in more than 3months and marking its biggest daily one-day rise since Sept. 13), respectively.

As such, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparables narrowed  from last week’s 2436  and 1558 bps, to 2400  and 1528 bps this week.

5 Year Credit Default Swaps, Mid-Prices (in basis points)

                       

07/11/2019 31/10/2019
Lebanon 1621 1693
KSA 66 69
Dubai 124 126
Brazil 116 120
Turkey 314 339

 

 

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 07/11/2019 31/10/2019 Change 07/11/2019 31/10/2019 Change bps
12/04/2021 8.25 70.82 69.68 1.64% 36.08% 37.16% -108
04/10/2022 6.1 60.25 60.30 -0.08% 26.55% 26.41% 14
27/01/2023 6 59.93 59.50 0.73% 24.74% 24.93% -19
22/04/2024 6.65 58.68 57.30 2.41% 21.51% 22.17% -66
04/11/2024 6.25 58.36 57.12 2.19% 19.74% 20.28% -54
03/12/2024 7.00 57.98 56.75 2.16% 20.79% 21.33% -54
26/02/2025 6.20 56.32 56.15 0.30% 19.89% 19.93% -4
12/06/2025 6.25 56.89 56.88 0.02% 19.12% 19.09% 3
28/11/2026 6.60 55.61 55.65 -0.08% 17.93% 17.89% 4
23/03/2027 6.85 55.58 55.70 -0.22% 17.93% 17.87% 6
29/11/2027 6.75 55.58 55.65 -0.13% 17.10% 17.06% 4
03/11/2028 6.65 55.58 55.50 0.14% 16.20% 16.21% -1
26/02/2030 6.65 55.64 55.50 0.25% 15.35% 15.38% -3
22/04/2031 7.00 55.92 55.74 0.34% 15.25% 15.30% -5
23/03/2032 7.00 55.91 55.80 0.20% 14.90% 14.92% -2
02/11/2035 7.05 56.18 55.80 0.68% 13.97% 14.06% -9
23/03/2037 7.25 56.93 55.90 1.85% 13.86% 14.11% -25

 

Leave a Reply

Your email address will not be published. Required fields are marked *