Lebanese Eurobonds Market Improved during the week ending October 11

09/10/201402/10/2014 ChangeYear to Date
BLOM Bond Index (BBI)*108.290108.1500.13%2.51%
Weighted Yield**5.16%5.17%-114
Weighted Spread***36635610-64



Lebanon’s Eurobonds market slightly improved during the week, where the BLOM Bond Index (BBI) rose by 0.13%, to settle at 108.29 points. The gauge posted a 2.51% year-to-date (y-t-d) increase, mainly attributed to higher demand on short-term maturities. However, yields on the 5Y and 10Y Lebanese Eurobonds remained at 5.14% and 6.21%, respectively.

Slowing worldwide economic growth has negatively impacted investments in emerging markets. This was mirrored by the JP Morgan emerging countries’ bond index weekly performance as the gauge gained a weekly 0.54% to 678.58 bps.

In the U.S, the Fed’s failure to send inflation above 2% and the possible postponement of the interest rate increase boosted demand for U.S Treasuries. This return to the safe assets’ market sent the 5Y and 10Y U.S yields down by 12 bps and 10 bps to 1.58% and 2.34%, respectively. Correspondingly, the 5Y spread between the Lebanese Eurobonds and their U.S benchmark widened by 12 bps to 356 bps, while the 10Y spread broadened by 10bps to 387 bps.

Lebanon’s Credit Default Swaps for 5 years (CDS) stood at 334-364 bps, compared to last week’s quote of 335-365 bps. In regional economies, the 5Y CDS quotes of Saudi Arabia and Dubai broadened from 51-57 bps and 161-171 bps to 53-58 bps and 164-174 bps, respectively. In emerging economies, the 5Y CDS of Brazil and Turkey narrowed from 175-177 bps and 205-208 bps to 154-156 bps and 193-196 bps.

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