The BLOM Bond Index (BBI), a market value-weighted index tracking the performance of the Lebanese government Eurobonds market excluding coupon payments, retreated by 1.85% to close the week on January 17 at 48.36 points. Meanwhile, the JP Morgan Emerging Markets’ Bond Index (EMBI) recorded a 0.71% weekly uptick ending the week at 890.68 points.
According to BLOMInvest Bank, the demand on the 5 year (5Y) and 10Y Lebanese Eurobonds dropped over the past week, as their respective yields rose from 38.80% and 22.45%, to 40% and 2.20%, respectively. As for the 5Y CDS, it recorded a significant increase from 2,592 basis point by January 10, 2020 to 2,821 basis point by January 17, 2020. In fact, last-minute obstacles have delayed the formation of a new government that was expected to be announced this week which negatively affected the performance of the Lebanese Eurobond Market
In the US, demand for treasuries was mainly driven by US-China “phase one” trade deal this week. In details, yields on the 5Y and 10Y US treasuries fell by 2 and 4 basis points (bps) to 1.63% and 1.81%, respectively, by the week ending Jan. 17. On Wednesday, the 2 countries signed a preliminary agreement following 2 years of tensions that have disturbed the global equity market. However, questions remain about details. In fact, while the deal will roll back some tariffs on Chinese goods, it also keeps tariffs in place on an estimated $360B of Chinese imports.
As such, the 5Y and 10Y spread between the yields on Lebanese Eurobonds and their US comparables rose by 122 bps and 79 bps to 3,837 bps and 2,139 bps respectively.
5 Year Credit Default Swaps, Mid-Prices (in basis points)
| 16/01/2019 | 09/01/2019 | |
| Lebanon | 2,821 | 2,592 |
| KSA | 62 | 61 |
| Dubai | 96 | 95 |
| Brazil | 98 | 98 |
| Turkey | 246 | 273 |
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 16/01/2020 | 09/01/2020 | Change | 16/01/2020 | 09/01/2020 | Change bps |
| 12/04/2021 | 8.25 | 56.59 | 54.76 | 3.33% | 63.92% | 66.59% | -266 |
| 04/10/2022 | 6.1 | 46.98 | 47.16 | -0.38% | 39.68% | 39.27% | 41 |
| 27/01/2023 | 6 | 43.73 | 44.69 | -2.16% | 39.42% | 38.25% | 118 |
| 22/04/2024 | 6.65 | 42.66 | 43.76 | -2.51% | 32.34% | 31.40% | 95 |
| 04/11/2024 | 6.25 | 42.73 | 43.76 | -2.37% | 29.17% | 28.38% | 79 |
| 03/12/2024 | 7.00 | 42.26 | 43.24 | -2.27% | 30.57% | 29.80% | 77 |
| 26/02/2025 | 6.20 | 42.10 | 43.37 | -2.93% | 28.31% | 27.39% | 91 |
| 12/06/2025 | 6.25 | 42.91 | 44.00 | -2.47% | 26.88% | 26.14% | 73 |
| 28/11/2026 | 6.60 | 41.79 | 43.34 | -3.57% | 24.55% | 23.67% | 88 |
| 23/03/2027 | 6.85 | 42.09 | 43.24 | -2.65% | 24.25% | 23.60% | 65 |
| 29/11/2027 | 6.75 | 41.82 | 43.34 | -3.50% | 23.14% | 22.35% | 79 |
| 03/11/2028 | 6.65 | 41.79 | 43.34 | -3.57% | 21.81% | 21.06% | 75 |
| 26/02/2030 | 6.65 | 41.32 | 43.12 | -4.18% | 20.73% | 19.92% | 82 |
| 22/04/2031 | 7.00 | 41.42 | 43.12 | -3.93% | 20.56% | 19.81% | 75 |
| 23/03/2032 | 7.00 | 41.81 | 43.10 | -2.98% | 19.81% | 19.26% | 55 |
| 02/11/2035 | 7.05 | 41.91 | 43.34 | -3.28% | 18.51% | 17.95% | 56 |
| 23/03/2037 | 7.25 | 41.96 | 43.51 | -3.55% | 18.56% | 17.95% | 61 |