BBI Down in Lebanon, Foreign Holdings of US Treasuries Reduced 

The BLOM Bond Index (BBI) fell slightly over the week from 102.54 points to 102.49 points, outpaced by the JP Morgan Emerging Markets’ Bond Index which gained a weekly 0.16% to reach 768.01 points.

The yield on the Lebanese Eurobonds maturing in 5Y grew from 6.32% last week to 6.38% this week while the yield on the 10Y Lebanese Eurobonds slid from 6.99% to 6.97% over the same period.

Yields on the US treasuries maturing in 5 and 10 years went from 1.27% and 1.75% last week to 1.26% and 1.76% this week. The spread between the yields on the 5 Year and 10 Year Lebanese Eurobonds and their US comparable went from 505 bps and 524 bps last week to 512 bps and 521 bps this week, respectively.

China’s holdings of US treasury securities reached around a four-year low in August to reach $1.19 trillion as the country needs all the foreign reserves it can get to support its currency the Yuan. Japan, the second biggest foreign holder of US treasury securities, also reduced its holdings from $1.15 trillion in July 2016 to $1.14 trillion in August 2016. The same goes for Saudi Arabia also reduced its holding of US treasury securities from $96.5 billion in July 2016 to $93 billion August 2016 as the country faces the consequences of lower oil prices.

5 Year Credit Default Swaps, Mid-Prices (in basis points)