Demand for the Lebanese Eurobonds made headway at the start of the calendar year, with the BLOM Bond Index (BBI) increasing by a weekly 0.25%, to stand at 107.56 points. Accordingly, demand for medium and long term maturities improved, with the 5Y and 10Y yields on the Lebanese Eurobonds retreating by 5 basis points (bps) and 13 bps to 5.29% and 6.16%, respectively.
In the U.S, demand for treasuries rose as inflation remained low at the start of the year, thus postponing the potential rise in interest rates, wherethe 5Y and 10Y yields lost 15 bps and 14 bps to 1.50% and 2.03%, respectively. Correspondingly, the 5Y and 10Y spreads between the Lebanese Eurobonds and their U.S benchmark widened by 10 bps and 4 bps to 379 bps and 409 bps, respectively.
Demand on emerging market bonds regressed on the back of a monetary policy easing in China allowing banks to lower their required reserves. This helped boost the Asian stock markets, and caused the bond markets to decline, as the JP Morgan Emerging Markets Index dropped by a weekly 0.35% to 660.24 points.
In Lebanon, the 5Y CDS went down from last week’s quote of 379-409 bps to 358-388 bps this week. In contrast, the 5Y CDS quotes in Saudi Arabia and Dubai broadened from 62-71 bps and 217-237 bps to respective quotes of 60-80 bps and 225-245 bps. Internationally, the 5Y CDS quote in Brazil widened from 198-205 bps to 205-208 bps. In Turkey, the quote moved from 177-190 bps to 182-185 bps.