Eurobonds Showed Slight Weekly Improvement

30/10/201423/10/2014 ChangeYear to Date
BLOM Bond Index (BBI)*108.142108.1230.02%2.37%
Weighted Yield**5.19%5.20%-117
Weighted Spread***370377-7-60


Lebanon’s Eurobonds showed slight improvement during the week, where the BLOM Bond Index (BBI) gained 0.02%, to settle at 108.14 points. The gauge posted a 2.37% year-to-date (y-t-d) increase. The bouncing back of the Eurobonds market can be attributed to a weekly downtick in the 5Y yield of 1 basis point (bp) to 5.17% and the steadying of the 10Y yield at 6.22%.

As oil prices continue to drop worldwide and the increasing probability of an increase in U.S interest rates, Emerging markets have witnessed an improving bond market, with the JP Morgan emerging countries’ bond index weekly performance demonstrating a weekly incline of 0.80% to 684.51 bps.

In the U.S, strong Q3 economic growth, earlier-than-expected rumors of an interest rate hike, and strengthening of the dollar against other leading currencies have led to the decline of treasuries. This sent the 5Y and 10Y U.S yields up by 6 bps and 3 bps to 1.58% and 2.32%, respectively. Correspondingly, the 5Y and 10Y spreads between the Lebanese Eurobonds and their U.S benchmark respectively narrowed by 7 bps and 3 bps to 359 bps and 390 bps.

Lebanon’s Credit Default Swaps for 5 years (CDS) broadened to 354-384 bps, compared to last week’s quote of 345-375 bps. In regional economies, the 5Y CDS quotes of Saudi Arabia and Dubai stood at respective 59-64 bps and 170-180 bps, the same quotes as last week. In emerging economies, Brazil’s 5Y CDS quote narrowed from 170-172 bps to 148-150 bps. Similarly, the 5Y CDS quote of Turkey experienced a contraction, from 184-186 bps to 173-176 bps.

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