The political conflicts are freezing any economic solution or a way out to save the Lebanese economy. The letter sent by the Lebanese president Michel Aoun to the Parliament asking them to discuss the failure of forming the new government seems to be putting more obstacles in front of any political solution. All this is happening, while the majority of Lebanese people are having difficulties to secure their basic needs, due to the uncontrollable inflation with the huge devaluation of the national currency.
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), increased by 0.94% to stand at 13.74 points by the week ending May 20, 2020 compared to the week of May 06, 2020. Meanwhile, the JP Morgan EMBI advanced from 908.96 to 911.03 during the period.
As such, the yields on the 5 year (5Y) and 10 year (10Y) Lebanese Eurobonds decreased by 487 basis points (bps) and 144 basis points (bps) to end the period at 67.13%. and 55.16%, respectively.
In the US, the yields on 5 year and 10 year yields US treasuries, recorded an increase from the week ending of 06 May 2021 from 0.81% and 1.58% to end of the of week of 20 May, 2021 to 0.83% and 1.63%, respectively. In fact, the increase of US yields can be explained by several factors; starting by the economic rebound that began to happen as the vaccination rollout are doing good in the US, following by a surge of inflation that threaten the value of these bonds, ending by investors sentiments as they are more bullish which encourage them to invest more in attractive and risky assets, in order to maximize their gains.
As such, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable narrowed from the week of 06 May, 2021 from 7,119, bps and 5,502, bps to 6,630, bps and 5,353, bps, respectively.
| 20/5/2021 | 06/05/2021 | |
| Lebanon | . | . |
| KSA | 65 | 67 |
| Dubai | 96 | 99 |
| Brazil | 178 | 185 |
| Turkey | 401 | 402 |
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 20/5/2021 | 06/05/2021 | Change | 20/5/2021 | 06/05/2021 | Change bps |
| 27/01/2023 | 6.00 | 13.25 | 13.00 | 1.95% | 188.58% | 185.95% | 263 |
| 22/04/2024 | 6.65 | 13.07 | 13.00 | 0.53% | 110.74% | 110.04% | 71 |
| 04/11/2024 | 6.25 | 13.31 | 13.00 | 2.35% | 93.14% | 93.83% | -69 |
| 03/12/2024 | 7.00 | 12.95 | 12.96 | -0.07% | 96.41% | 95.33% | 108 |
| 26/02/2025 | 6.20 | 13.37 | 13.13 | 1.87% | 85.89% | 86.22% | -33 |
| 12/06/2025 | 6.25 | 13.46 | 13.34 | 0.93% | 81.11% | 80.89% | 22 |
| 28/11/2026 | 6.60 | 13.50 | 13.33 | 1.26% | 67.13% | 67.31% | -19 |
| 23/03/2027 | 6.85 | 13.08 | 13.10 | -0.18% | 67.40% | 67.13% | 27 |
| 29/11/2027 | 6.75 | 13.26 | 13.07 | 1.46% | 62.78% | 63.15% | -37 |
| 03/11/2028 | 6.65 | 13.10 | 13.03 | 0.59% | 59.05% | 59.28% | -23 |
| 26/02/2030 | 6.65 | 13.24 | 13.22 | 0.15% | 54.98% | 54.99% | -1 |
| 22/04/2031 | 7.00 | 12.95 | 12.92 | 0.25% | 56.55% | 56.72% | -17 |
| 23/03/2032 | 7.00 | 13.30 | 13.08 | 1.64% | 54.23% | 55.04% | -81 |
| 02/11/2035 | 7.05 | 13.01 | 13.01 | -0.01% | 54.40% | 54.51% | -10 |
| 23/03/2037 | 7.25 | 13.68 | 13.63 | 0.33% | 52.86% | 53.09% | -22 |
Source: BLOMInvest Bank