The economic situation in Lebanon has been deteriorating since late 2019 with no insight for recovery. In fact, the GDP was on a steady decline as it reached a negative 25% in 2020. Moreover, a new Cabinet might be formed later this year, but it might not put a stop to the collapse if right economic and political reforms will not be taken. However, such a delay is increasing social tensions, poverty and unemployment rate to a new high level in Lebanon.
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 1.67% to stand at 13.97 points by the week ending May 27, 2020 compared to the week of May 20, 2020. Meanwhile, the JP Morgan EMBI advanced from 911.03 to 915.48 during the period.
As such, the yields on the 5 year (5Y) and 10 year (10Y) Lebanese Eurobonds increased by 437 basis points (bps) and 74 basis points (bps) to end the period at 71.50%. and 55.90%, respectively.
In the US, the yields on 5 year and 10 yeald US treasuries, recorderd a decrease from the week ending of 20 May 2021 from 0.83% and 1.63% to end of the of week of 27 May, 2021 to 0.81% and 1.61%, respectively. In fact, the decrease of US yields, which move inversely to prices, can be explained by an unexpected fall in jobless claim this week, a higher inflation over what economists anticipated that reached 3.1%, and a strong growth in GDP rate for the first quarter. Moreover, negotiations over an infrastructure spending package, that is in focurs for investors, will set to be shared by the President of the US today afternoon aimed to push further the post-COVID recovery market.
As such, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparables went up from the week of 20 May, 2021 from 6,630, bps and 5,353, bps to 7,069, bps and 5,429, bps, respectively.
| 27/05/2021 | 20/5/2021 | |
| Lebanon | . | . |
| KSA | 62 | 65 |
| Dubai | 90 | 96 |
| Brazil | 173 | 178 |
| Turkey | 407 | 401 |
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 27/05/2021 | 20/5/2021 | Change | 27/05/2021 | 20/5/2021 | Change bps |
| 27/01/2023 | 6.00 | 13.56 | 13.25 | 2.32% | 188.31% | 188.58% | -27 |
| 22/04/2024 | 6.65 | 13.28 | 13.07 | 1.62% | 110.18% | 110.74% | -57 |
| 04/11/2024 | 6.25 | 13.29 | 13.31 | -0.11% | 93.57% | 93.14% | 43 |
| 03/12/2024 | 7.00 | 13.09 | 12.95 | 1.07% | 96.30% | 96.41% | -12 |
| 26/02/2025 | 6.20 | 13.42 | 13.37 | 0.34% | 86.05% | 85.89% | 17 |
| 12/06/2025 | 6.25 | 13.64 | 13.46 | 1.32% | 80.79% | 81.11% | -32 |
| 28/11/2026 | 6.60 | 13.56 | 13.50 | 0.47% | 67.12% | 67.13% | -1 |
| 23/03/2027 | 6.85 | 13.52 | 13.08 | 3.35% | 65.97% | 67.40% | -143 |
| 29/11/2027 | 6.75 | 13.33 | 13.26 | 0.54% | 62.69% | 62.78% | -9 |
| 03/11/2028 | 6.65 | 13.29 | 13.10 | 1.40% | 58.46% | 59.05% | -59 |
| 26/02/2030 | 6.65 | 13.54 | 13.24 | 2.25% | 54.06% | 54.98% | -92 |
| 22/04/2031 | 7.00 | 13.05 | 12.95 | 0.80% | 56.15% | 56.55% | -40 |
| 23/03/2032 | 7.00 | 13.56 | 13.30 | 1.94% | 53.32% | 54.23% | -91 |
| 02/11/2035 | 7.05 | 13.35 | 13.01 | 2.68% | 53.00% | 54.40% | -141 |
| 23/03/2037 | 7.25 | 14.26 | 13.68 | 4.25% | 50.76% | 52.86% | -210 |
Source: BLOMInvest Bank