U.S Market Appeared Resilient During Delta Spread


16/09/202110/09/2021 ChangeYear to Date
BLOM Bond Index (BBI)16.6615.557.14%17.53%
Weighted Yield          62.38%65.34%-4.53%-20.48%
Weighted Spread             6,234              6,529-4.52%-24.69%


!! Keep the Formulas !!
JP Morgan EMBI940.00942.22
5Y LEB65.15%67.50%
10Y LEB47.75%50.20%
5Y US0.84%0.82%
10Y US1.34%1.35%
5Y SPREAD                      6,431                        6,668
10Y SPREAD                      4,641                        4,885

This week, Lebanon formed a new Cabinet for the first time in over a year. Hopes spread among all the Lebanese. However, the parliament of the European Union issued a statement in which it declared the country’s crisis a man-made catastrophe caused by the ruling political class and decried the non-initiation of an IMF program presented by the previous government. In this context, Thursday the EU will vote on an important decision regarding sanctions on some of the Lebanese politician engaged in corruption and blocking the Beirut Port Explosion investigation. In fact, all eyes today are on the economic recovery process and talks with the international creditors in order to ease the hard situation in the country and making through the next elections of May 2022.

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), jumped by 17.53%  to stand at 16.55 points by the week ending September 16, 2021 compared to the week of September 10, 2021. Meanwhile, the JP Morgan EMBI slightly decreased from 942.22 to 940.00 during the period.

In addition, the yields on the 5 years (5Y) and 10 years (10Y) Lebanese Eurobonds decreased by 235 basis points (bps) and 245 (bps) to end up the period at 65.15% and 47.75%, respectively.

In the US, the yields on 5 year treasuries recorded a slight uptick from the week ending September 10, 2021 from 0.82% to 0.84% by the week ending September 16. Meanwhile, the yields on 10 year US treasuries went down from last week 1.35% to 1.34% by the week ending September 16.

This week in the U.S, the five-year Treasury yield, moved up in line with interest rate expectations, and indicated the long wait for next week’s Federal Reserve meeting as it prepares to taper its bond holdings purchases. Moreover, retail sales in the States unexpectedly went up by a monthly 0.7% in August, mainly backed by school shopping and online purchases. Concerning jobless claim, it rose this week to stand at 332,000 jobless claims. Lastly, the American economy is still proving to be resilient during the worldwide pandemic.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable went down from 6,668 bps and 4,885 bps to 6,431 bps and 4,641 respectively.


5Y Credit Default Swaps (CDS)
Lebanon . .
 Source: Bloomberg


Weekly Change of Lebanese Eurobonds Prices 

Maturity Coupon in %16/09/202110/09/2021Change 16/09/202110/09/2021Change bps

Source: BLOMInvest Bank

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