Lebanese Eurobonds Market Improved over the Week

After concerns of a potential war with Israel have calmed down, investors’ demand for Lebanese Eurobonds recovered some of the previous week’s loss. In fact, the BLOM Bond Index (BBI) added a weekly 0.16% to 107.03 points mainly on improving demand for long term maturities. While the 5Y yield remained subdued at 5.24%, the 10Y yield on the Lebanese Eurobonds lost 5 basis points (bps) to 6.18%.

The expected progress in the U.S. labor market was the main reason behind the Treasuries negative performance during the week ending February 06, 2015. In details, the 5Y and 10Y yields inched up by weekly 2 bps and 6 bps to 1.30% and 1.83%, respectively. Correspondingly, the 5Y and 10Y spreads between the Lebanese Eurobonds and their U.S benchmark tightened by 2 bps and 11 bps to respective levels of 394 bps and 435 bps.

The rising crude oil prices that painted the week along with Greece’s anti-austerity call were good news for emerging markets. Accordingly, emerging bonds rallied over the week sending the JP Morgan Emerging Markets Index up by 1.6% to 669.57 points.

Lebanon’s credit default swaps for 5 years (CDS) were last trading on Friday at 371-393 bps, slightly narrowing from last week’s quote of 369-399 bps. In regional economies, the 5Y insurance premiums on sovereign debt in Saudi Arabia went from 72-80 bps to a current quote of 71-79 bps, while that of Dubai narrowed by an average of 5 bps to 210-230 bps. As for emerging economies, the 5Y CDS quote in Brazil broadened from 209-213 bps to 225-228 bps. Turkey’s 5Y CDS quote almost steadied when comparing to last week as it went from 185-188 bps to 186-189 bps.

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