This week, Prime Minister-designate Saad Hariri was on the verge of resignation as a result of his resentment with the continued impediment by President Michel Aoun and MP Gebran Bassil to form a new government. Moreover, fuel shortage continued this week along with higher prices. As for the Eurobonds market, it continues to be stagnant following the political situation in the country.
As such, 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), decreased by 0.75% to stand at 13.18 points by the week ending July 08, 2021 compared to the week of July 1, 2021. Meanwhile, the JP Morgan EMBI slightly progressed from 924.11 to 927.70 during the period.
In addition, the yields on the 5 year (5Y) Lebanese Eurobonds decreased by 50 basis points (bps) and the yield on the 10 year (10Y) Lebanese Eurobonds increased by 29 basis points (bps) to end the period at 74.00% and 57.20%, respectively.
In the US, the yields on 5 year and 10 year US treasuries recorded a slight decrease from the week ending July 1, 2021 from 0.89% and 1.48% to 0.74% and 1.30 %,respectively, by the end of week 8 July, 2021. In details, the US treasury market was affected by the increase in weekly jobless claims; to reach 373,000 for the week ended July 3, compared with the 350,000 Dow Jones estimate. Moreover, U.S. Treasury yield under 1.5%, signifies that the bond market doesn’t view sustained inflation as much of a risk. According to the Fed, the current rise in inflation is transitory, and as such no immediate reaction is needed.
In turn, the 5Y spread between the yield on Lebanese Eurobonds and their US comparable went down from last week from 7,361 bps to 7,326 bps, however, the 10Y spread went up from 5,543 bps to 5,590 bps.
| 8/7/2021 | 1/7/2021 | |
| Lebanon | . | . |
| KSA | 58 | 54 |
| Dubai | 88 | 86 |
| Brazil | 175 | 167 |
| Turkey | 392 | 386 |
| Source: Bloomberg | ||
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 08/07/2021 | 01/07/2021 | Change | 08/07/2021 | 01/07/2021 | Change bps |
| 27/01/2023 | 6.00 | 12.72 | 12.80 | -0.57% | 215.32% | 210.91% | 441 |
| 22/04/2024 | 6.65 | 12.75 | 12.80 | -0.34% | 116.84% | 115.88% | 95 |
| 04/11/2024 | 6.25 | 12.69 | 12.68 | 0.09% | 98.78% | 98.39% | 39 |
| 03/12/2024 | 7.00 | 12.71 | 12.73 | -0.16% | 100.36% | 99.88% | 48 |
| 26/02/2025 | 6.20 | 12.69 | 12.86 | -1.35% | 91.51% | 90.30% | 122 |
| 12/06/2025 | 6.25 | 12.90 | 13.06 | -1.25% | 85.53% | 84.59% | 95 |
| 28/11/2026 | 6.60 | 12.69 | 13.00 | -2.41% | 70.84% | 69.57% | 127 |
| 23/03/2027 | 6.85 | 12.67 | 12.83 | -1.28% | 69.71% | 68.95% | 75 |
| 29/11/2027 | 6.75 | 12.75 | 12.71 | 0.35% | 65.04% | 65.15% | -10 |
| 03/11/2028 | 6.65 | 12.74 | 12.81 | -0.52% | 60.53% | 60.25% | 28 |
| 26/02/2030 | 6.65 | 12.70 | 12.59 | 0.91% | 57.16% | 57.51% | -35 |
| 22/04/2031 | 7.00 | 12.73 | 12.76 | -0.17% | 57.34% | 57.24% | 9 |
| 23/03/2032 | 7.00 | 12.60 | 12.75 | -1.23% | 56.94% | 56.30% | 64 |
| 02/11/2035 | 7.05 | 12.76 | 12.80 | -0.35% | 55.20% | 55.03% | 17 |
| 23/03/2037 | 7.25 | 13.08 | 13.20 | -0.92% | 55.16% | 54.66% | 50 |
Source: BLOMInvest Bank