In Lebanon, after more than a year of economic downturn and months of mired political situation, protesters have been blocking roads across the country for 7 consecutive days, as a result of their growing anger. Furthermore, on Monday, General Joseph Aoun stressed on the fact that people have the right to engage in peaceful protests with no damage to public property and no violations attacking the Lebanese army. On a further note, the Lebanese pound experienced a further plunge to reach $10,600 /LBP by the week ending 11 March 2021. The ramification of this drop is reflected in the lower Lebanese purchasing power, consequently reaching a struggle over some subsidized goods in local markets.
As a result, the BLOM Bond Index (BBI) which is BLOMInvest Bank’s market value-weighted index tracking the performance of the Lebanese government Eurobonds’ market (excluding coupon payments) observed a downtick this week by 0.75% to stand at 13.28 points by the week ending 11 March 2021. Meanwhile, the JP Morgan EMBI fell slightly from last week’s 898 points to 895.48 points this week.
As such, the yield of the 5 year (5Y) and the 10 year (10Y) Lebanese Eurobonds increased during this period from 72.55% and 56.85% to 73.10% and 57.10%, respectively.
In the US, President Joe Biden promised to provide Johnson & Johnson’s vaccine, enough for 500 million people in the coming phase. Moreover, the congress signed a $1.9 trillion coronavirus relief package on Thursday, one of the largest economic rescue plan in US history, in hope to boost the economy. In details, a new federal spending plan and anti-poverty programs to be put into action to help millions of families still struggling amid the pandemic. Adding that this legislation will be a milestone to fast-track vaccination , open back schools and provide jobs to the Americans.
As such, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable widenned from 7,178 bps and 5,531 bps to 7,232 bps and 5,556 respectively.
5 Year Credit Default Swaps, Mid-Prices (in basis points)
| 5Y Credit Default Swaps (CDS) | ||
| 11/03/2021 | 04/03/2021 | |
| Lebanon | . | . |
| KSA | 63 | 69 |
| Dubai | 100 | 107 |
| Brazil | 197 | 197 |
| Turkey | 320 | 329 |
| Source: Bloomberg | ||
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 11/03/2021 | 04/03/2021 | Change | 11/03/2021 | 04/03/2021 | Change bps |
| 27/01/2023 | 6.00 | 12.91 | 12.96 | -0.42% | 170.28% | 168.03% | 224 |
| 22/04/2024 | 6.65 | 13.16 | 13.06 | 0.77% | 104.03% | 103.91% | 12 |
| 04/11/2024 | 6.25 | 13.18 | 13.12 | 0.46% | 89.27% | 89.11% | 16 |
| 03/12/2024 | 7.00 | 12.78 | 12.75 | 0.22% | 92.74% | 92.50% | 24 |
| 26/02/2025 | 6.20 | 13.06 | 13.23 | -1.26% | 84.21% | 83.28% | 93 |
| 12/06/2025 | 6.25 | 13.20 | 13.25 | -0.33% | 79.02% | 78.59% | 43 |
| 28/11/2026 | 6.60 | 12.97 | 13.04 | -0.50% | 67.28% | 66.91% | 36 |
| 23/03/2027 | 6.85 | 12.75 | 12.78 | -0.20% | 67.71% | 67.43% | 27 |
| 29/11/2027 | 6.75 | 12.59 | 12.79 | -1.56% | 63.97% | 63.15% | 81 |
| 03/11/2028 | 6.65 | 12.84 | 12.88 | -0.30% | 59.15% | 58.94% | 22 |
| 26/02/2030 | 6.65 | 12.49 | 12.75 | -2.07% | 57.51% | 56.55% | 96 |
| 22/04/2031 | 7.00 | 12.75 | 12.75 | 0.00% | 57.01% | 56.95% | 5 |
| 23/03/2032 | 7.00 | 12.72 | 12.81 | -0.72% | 56.44% | 56.08% | 37 |
| 02/11/2035 | 7.05 | 12.85 | 12.71 | 1.06% | 56.27% | 55.33% | 94 |
| 23/03/2037 | 7.25 | 12.81 | 12.99 | -1.38% | 56.62% | 55.76% | 86 |
Source: BLOMInvest Bank