The BLOM Bond Index (BBI), the bank’s market value-weighted index that tracks the performance of the Lebanese government Eurobonds market excluding coupon payments, fell by 0.97% to end the business week on December 26th at 50.19 points. Meanwhile, the JP Morgan Emerging Markets’ Bond Index (EMBI) added a weekly 0.23% to 880.43 points over the same week.
The week began with consultations led by Hassan Diab inviting the different parliamentary blocs, with the pledge to swiftly form an independent government to agree on a rescue plan needed for the country’s economic, financial and political crisis. However, some political blocs refrained from meeting and participating in the government formation led by Diab while protests also continued in some areas, demanding a technocratic government. This left a wait-and-see attitude among investors and the international community, as political bickering among the main blocs perisisted. The rising uncertainty around a possible government formation before the New Year contributed to the Lebanon 5Y credit default swaps (CDS) rising from last week’s 2,385 basis points (bps) to 2,407 bps by December 26th.
Meanwhile, demand on US treasuries during the short trading week with Christmas holiday witnessed slight fluctuations. In fact, the yields on 5Y and 10Y US treasuries fell incrementally by 1 and 2 bps to stand at 1.72% and 1.9%, respectively, by the week ending Dec. 26th. Demand on treasuries fell on the account of a prelimnary trade deal between the US and China such that the latter announced cutting tariffs on some U.S. consumer items starting Jan. 01st. Noentheless, economic data released by the U.S. government early-on this week boosted demand on eurobonds, as it revealed Orders for durable goods sank by 2% in November, slipping below economists’ expectations of a 1% uptick and thereby constituting the biggest decline since May.
As such, the 5Y spread between the yields on Lebanese Eurobonds and their US comparables fell by 29 bps to 3,538 bps while the 10Y spreads climbed by 27 bps to end the week at 2,010 bps.
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 19/12/2019 | 12/12/2019 | Change | 19/12/2019 | 12/12/2019 | Change bps |
| 12/04/2021 | 8.25 | 55.89 | 57.86 | -3.40% | 61.90% | 57.59% | 431 |
| 04/10/2022 | 6.1 | 48.21 | 48.67 | -0.94% | 37.60% | 36.94% | 66 |
| 27/01/2023 | 6 | 46.23 | 47.94 | -3.57% | 36.22% | 34.49% | 173 |
| 22/04/2024 | 6.65 | 45.10 | 46.76 | -3.56% | 30.15% | 28.89% | 126 |
| 04/11/2024 | 6.25 | 45.16 | 46.76 | -3.43% | 27.25% | 26.18% | 107 |
| 03/12/2024 | 7.00 | 45.25 | 46.63 | -2.97% | 28.24% | 27.29% | 95 |
| 26/02/2025 | 6.20 | 44.70 | 46.62 | -4.12% | 26.37% | 25.15% | 122 |
| 12/06/2025 | 6.25 | 45.65 | 47.25 | -3.39% | 25.01% | 24.06% | 95 |
| 28/11/2026 | 6.60 | 44.72 | 46.41 | -3.64% | 22.86% | 21.99% | 87 |
| 23/03/2027 | 6.85 | 44.50 | 46.46 | -4.22% | 22.86% | 21.87% | 99 |
| 29/11/2027 | 6.75 | 44.53 | 46.62 | -4.49% | 21.71% | 20.73% | 98 |
| 03/11/2028 | 6.65 | 44.56 | 46.51 | -4.20% | 20.46% | 19.61% | 85 |
| 26/02/2030 | 6.65 | 44.48 | 46.51 | -4.37% | 19.30% | 18.48% | 82 |
| 22/04/2031 | 7.00 | 44.37 | 46.62 | -4.82% | 19.26% | 18.38% | 88 |
| 23/03/2032 | 7.00 | 44.50 | 46.53 | -4.36% | 18.67% | 17.90% | 77 |
| 02/11/2035 | 7.05 | 44.48 | 46.51 | -4.37% | 17.51% | 16.79% | 72 |
| 23/03/2037 | 7.25 | 44.60 | 46.60 | -4.29% | 17.53% | 16.83% | 70 |