The increased threat of war with Israel after recent altercations caused a decreased demand for Lebanese Eurobonds. The BLOM Bond Index (BBI) lost a weekly 0.50% to 106.85 points as yields on both medium and long-term securities (maturities of 5Y and 10Y) rose by 12 basis points (bps) and 8 bps to 5.24% and 6.23%, respectively.
In the U.S., investors’ appetite for Treasuries increased as a result of high market volatility and the announcement of a forthcoming $77B T-Bill auction next week in Washington. This led to the 5Y and 10Y yields to experience downticks of 11 bps and 13 bps to reach 1.28% and 1.77%, respectively. Correspondingly, the 5Y and 10Y spreads between the Lebanese Eurobonds and their U.S benchmark widened by 23 bps and 21 bps to 396 bps and 446 bps.
In emerging markets, a slide in most Asian stock markets and high global volatility have driven investors towards emerging-market treasury bills . Consequently, the JP Morgan Emerging Markets Index posted a 0.82% weekly gain to 659.19 points.
Lebanon’s credit default swaps for 5 years (CDS) were last trading on Friday at 369-399 bps, remaining practically similar to last week’s quote of 368-397 bps. In regional economies, the 5Y insurance premiums on sovereign debt in Saudi Arabia rose from 59-79 bps to a current quote of 72-80 bps, as the new king Salman began his reign as King with changes in his Cabinet. On the other hand, Dubai’s CDS quote remained relatively stable, moving from 216-236 bps last week to 215-235 bps this week. As for emerging economies, the CDS quote in Brazil escalated from 196-200 bps to 209-213 bps. Turkey’s 5Y CDS quote similarly increased from 179-182 bps to 185-188 bps.