The Lebanese Eurobonds market signaled a drop this week after three consecutive increases as the situation sunk into the chaos this week amid continuous political standoff as well as the disappointing feedback stated by the economy and trade minister of Lebanon after attending Jeddah Security and Development Summit hosted by the Saudi Kingdom on Saturday. The Minister declared lack of an assistance package for Lebanon as leaders of the Summit affirmed that it is crucial for the Lebanese State to impose its control on all of its territories.
Amid these disruptions, 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), recorded a downtick of 1.63% weekly to stand at 6.64 points by the week ending July 21, 2022 compared to the week of July 14, 2022. As for the JP Morgan EMBI, it slightly increased by 2.04% to stand at 747.31 by the end the week of July 21, 2022, compared to 732.37 at the end of the week of July 14, 2022.
Furthermore, the yield on the 5 years (5Y) and the 10 years (10Y) Lebanese Eurobonds registered a expansion of 71 and 10 basis points (bps) to stand at 122.41% and 105.35%, respectively, by the week ending July 21, 2022.
This week in the U.S., the yield on the 10Y T-bills note was down significantly to 2.91% same as the yield on the 5Y T-bills note that followed the same trend by falling to 3%. Meanwhile, the yield on the 1Y, 2Y and 3Y Treasury bond also dropped during the last session of this week, however, they remained relatively higher than 5Y and 10Y and stood at 3.11%, 3.10%, and 3.07%, respectively indicating further inversion for the yield curve. The reason behind this retraction is weaker economic data and remarkable interest rate hike from the European Central Bank fueled concerns about the global economic outlook.
On the jobs market, initial jobless claims increased to reach 251,000 claims for the week of July 16, up from previous 244,000 claims. This could be alarming potential slow in the US economic as higher interest rate and overheated inflation would weigh on consumer spending.
In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded an increase from 11,864 bps and 10,229 bps to 11,941 bps and 10,244 bps by the week ending July 21, 2022.
| 5Y Credit Default Swaps (CDS) | ||
| 21/07/2022 | 14/07/2022 | |
| Lebanon | . | . |
| KSA | 72 | 77 |
| Dubai | 140 | 140 |
| Brazil | 296 | 331 |
| Turkey | 843 | 894 |
| Source: Bloomberg | ||
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 21/07/2022 | 14/07/2022 | Change | 21/07/2022 | 14/07/2022 | Change bps |
| 22/04/2024 | 6.65 | 6.50 | 6.54 | -0.67% | 281.29% | 276.77% | 452 |
| 04/11/2024 | 6.25 | 6.50 | 6.50 | -0.02% | 207.38% | 205.74% | 165 |
| 03/12/2024 | 7.00 | 6.50 | 6.50 | 0.00% | 206.99% | 205.79% | 121 |
| 26/02/2025 | 6.20 | 6.34 | 6.50 | -2.40% | 185.94% | 181.77% | 417 |
| 12/06/2025 | 6.25 | 6.64 | 6.65 | -0.15% | 164.44% | 163.62% | 82 |
| 28/11/2026 | 6.60 | 6.32 | 6.50 | -2.80% | 127.38% | 124.89% | 249 |
| 23/03/2027 | 6.85 | 6.50 | 6.52 | -0.43% | 122.43% | 121.72% | 71 |
| 29/11/2027 | 6.75 | 6.35 | 6.50 | -2.38% | 116.31% | 114.27% | 203 |
| 03/11/2028 | 6.65 | 6.36 | 6.50 | -2.17% | 108.50% | 106.62% | 188 |
| 26/02/2030 | 6.65 | 6.40 | 6.53 | -2.07% | 104.66% | 102.51% | 215 |
| 22/04/2031 | 7.00 | 6.37 | 6.45 | -1.36% | 107.63% | 106.31% | 132 |
| 23/03/2032 | 7.00 | 6.50 | 6.50 | 0.00% | 105.35% | 105.24% | 11 |
| 02/11/2035 | 7.05 | 6.35 | 6.50 | -2.38% | 107.98% | 105.62% | 236 |
| 23/03/2037 | 7.25 | 6.35 | 6.56 | -3.14% | 110.96% | 107.53% | 343 |
Weekly Change of Lebanese Eurobonds Prices
Source: BLOMInvest Bank