US Treasuries and Emerging Countries’ Bonds Improve during the Week ending September 25

25/09/201418/09/2014 ChangeYear to Date
BLOM Bond Index (BBI)*108.104108.202-0.09%2.33%
Weighted Yield**5.15%5.14%113
Weighted Spread***34933712-81


Demand for Lebanon’s Eurobonds declined for the second week, as shown by the BLOM Bond Index (BBI) that decreased by 0.09% to 108.10 points. However, the index is still up by 2.33% since year start. The 5Y yield inched up by 1 basis point (bp) to 5.09%, while the 10Y yield steadied at 6.19%.

US airstrikes on ISIL in Iraq and Syria drew international investors towards safe government bonds, where the JP Morgan emerging countries’ bond index added a weekly 0.82% to 680.96 points.

The strengthened dollar boosted demand for US treasuries where 5Y and 10Y treasury yields dropped to 1.75% and 2.53%, down by 10 bps and 11 bps from the prior week’s levels. As a result, the 5Y and 10Y spreads between the Lebanese Eurobonds and their U.S benchmark broadened by 11 bps each to 334 bps and 367 bps, respectively.

Lebanon’s credit default swaps (CDS) for 5 years widened by 5 bps from last week’s quote, to 335-365 bps. Similarly, in regional economies, 5Y CDS quotes of Saudi Arabia and of Dubai broadened from 46-51 bps and 150-160 bps to 47-52 bps and 155-165 bps, respectively. In addition, the 5Y CDS of Brazil and Turkey stretched from 138-140 bps and 183-186 bps to 160-162 bps and 195-197 bps, respectively.

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