Lebanon’s Eurobonds showed improvement during the week, with the BLOM Bond Index (BBI) increasing 0.11%, to settle at 108.38 points. The gauge posted a 2.59% year-to-date (y-t-d) increase as the Eurobonds market gained from higher demand on 5Y and 10Y yields, which decreased by 3 basis points (bps) and 4 bps, respectivelyto 5.12% and 6.12%. The increase in demand can be attributed to the continued absence of a Lebanese president after the latest failure in the presidential elections.
As the OPEC meeting to be held on November 27th approaches and the Chinese government rumored to offer $8.17B in short-term bonds, investors seem to be taking more secure positions. This led to the JP Morgan Emerging Countries’ bond index posting a weekly increase of 0.15% to 676.97 bps.
In the U.S, inflation continuing to fall below the Fed’s target despite economic growth, resulted in U.S treasuries remaining almost stable. 5Y yields steadied at 1.64% while 10Y yields barely moved, decreasing by 1 bp to 2.34%. Correspondingly, the 5Y and 10Y spreads between the Lebanese Eurobonds and their U.S benchmark respectively narrowed by 3 bps each to 348 bps and 381 bps, respectively.
In Lebanon, the 5Y CDS broadened to 377-407 bps from 350-380 bps as the Institute of Economics and Peace (IEP) rated Lebanon in 14th place on the Global Terrorism Index. In the region, the 5Y CDS of Dubai and Saudi broadened, from 169-179 bps to 179-180 bps and from 60-65 bps to 65-70 bps, respectively. Internationally, the 5Y CDS of Turkey narrowed from 171-174 bps to 167-170 bps. That of Brazil also narrowed from 176-178 bps to 172-175 bps.