The BLOM Bond Index (BBI) kept falling for the second week in a row, hitting the lowest level since end of April 2021. This decline is, as all times, driven by the country’s severe financial and economic crises. In this concern, Lebanese Government announced this week partial removal for medicine subsidies. This move will cause prices to skyrocket and many would not be able to afford even medications crucial for chronic diseases. In turn, medications now would cost more than the monthly minimum wage and would definitely lead to a health crisis in the country. However, the government is not taking parallel action to assist low income families, except for a 2 months’ income support to public employees.
In more details, 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), plunged further by 5.94% to stand at 12.50 points by the week ending November 18, 2021 compared to the week of November 11, 2021. Meanwhile, the JP Morgan EMBI slightly decreased from 925.69 to 917.91during the period.
In addition, the yield on the 5 years (5Y) and 10 years (10Y) Lebanese Eurobonds jumped by 385 and 199 basis points (bps), respectively, to end the week of November 18 at 77.45% and 59.20%.
In the US, the yields on 5 year treasuries recorded a downtick from the week ending November 11, 2021 from 1.23% to 1.22%, while the 10 year US treasuries registered an uptick from last week 1.56% to 1.59% by the week ending November 18, respectively.
This week in the U.S market, inflation has become one of the most talked about subjects. After the CPI jumped yearly to 6.2% in October, higher cost of living for crucial items is hurting spending capacity. In turn, the Fed is looking to adopt an increase rate policy to preserve the economic stability in the U.S. However, today’s economy is paying for the inflation surge due to stimulus programs started with the pandemic, in addition to supply-side disruptions. Swings in stocks were noticed but the swings in the bond market are truly significant.
In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded a jump from 7,237 bps and 5,565 bps to 7,623 bps and 5,761 respectively.
| 18/11/2021 | 11/11/2021 | |
| Lebanon | . | . |
| KSA | 47 | 48 |
| Dubai | 88 | 89 |
| Brazil | 238 | 238 |
| Turkey | 448 | 412 |
| Source: Bloomberg | ||
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 18/11/2021 | 11/11/2021 | Change | 18/11/2021 | 11/11/2021 | Change bps |
| 22/04/2024 | 6.65 | 12.27 | 12.83 | -4.34% | 137.25% | 132.54% | 470 |
| 04/11/2024 | 6.25 | 12.09 | 12.77 | -5.34% | 113.30% | 108.93% | 437 |
| 03/12/2024 | 7.00 | 12.09 | 12.76 | -5.27% | 114.15% | 109.54% | 461 |
| 26/02/2025 | 6.20 | 12.06 | 12.81 | -5.83% | 103.00% | 98.75% | 426 |
| 12/06/2025 | 6.25 | 12.17 | 13.12 | -7.28% | 95.88% | 90.93% | 494 |
| 28/11/2026 | 6.60 | 12.00 | 12.89 | -6.91% | 77.01% | 73.16% | 385 |
| 23/03/2027 | 6.85 | 12.01 | 12.78 | -6.08% | 75.13% | 71.87% | 325 |
| 29/11/2027 | 6.75 | 12.12 | 12.79 | -5.25% | 69.65% | 66.87% | 278 |
| 03/11/2028 | 6.65 | 12.10 | 12.79 | -5.39% | 64.52% | 61.91% | 261 |
| 26/02/2030 | 6.65 | 11.86 | 13.00 | -8.78% | 61.09% | 56.82% | 427 |
| 22/04/2031 | 7.00 | 12.04 | 12.75 | -5.54% | 60.83% | 57.98% | 285 |
| 23/03/2032 | 7.00 | 12.25 | 12.79 | -4.22% | 58.73% | 56.56% | 216 |
| 02/11/2035 | 7.05 | 12.11 | 12.75 | -5.06% | 58.40% | 55.61% | 279 |
| 23/03/2037 | 7.25 | 12.29 | 12.77 | -3.76% | 58.66% | 56.56% | 211 |
Source: BLOMInvest Bank