Demand for Lebanese Eurobonds showed a modest progress during the past week, where the BLOM Bond Index (BBI) went up by a weekly 0.08% to 107.20 points. In addition, yields on the 5Y and 10Y Lebanese notes went down by a weekly 2 basis points (bps) each, to 5.18% and 6.06%, respectively. Thus, the BBI outperformed the JP Morgan Emerging Markets’ Bond Index, which steadied at 675.59 points.
On the US front, demand for treasuries increased, as investors seek safety due to the uncertainty of Europe’s policy makers’ ability to resolve the Greek debt crisis, and the plunge in Chinese stock market. 5Y and 10Y yields dropped 6 bps and 8 bps to 1.58% and 2.32%, respectively. Accordingly, the spread between the yields on the 5Y Lebanese bonds and their US counterpart broadened 4 bps to 360 bps. Similarly, the 10Y yield spread widened by 6 bps to 374 bps.
Lebanon’s 5Y Credit Default Swaps (CDS) widened from 353-378 bps last week, to 355-380 bps on July 9th. In regional economies, 5 year CDS quotes of Turkey and of Brazil also stretched from 219-222 bps and 252-253 bps, to 220-223 bps and 263-266 bps, respectively. Dubai’s 5Y CDS quote went from 176-191 bps to 174-194 bps, while Saudi Arabia maintained last week’s quote of 57-65 bps.