Impact of Higher US Inflation Pull the Lebanese Bond Index Lower
The impact of the stronger than expected consumer prices data in the US continued to weigh down on global bond markets. As such, the BLOM Bond Index (BBI) ended the week at 99.18 points, down by a weekly 0.26%. However, the BBI was outpaced by the JP Morgan Emerging Markets’ Bond Index (EMBI) which recuperated by a weekly 0.15% to end the week at 787.8 points.
The demand on 5 year (5Y) and 10Y Eurobonds fell over the week as their respective yields rose from 6.80% and 7.76% to 7.16% and 7.78%, respectively.
Demand for 5Y and 10Y US treasuries slightly dropped as their yields merely increased from 2.65% and 2.91% last week to 2.66% and 2.96% this week, respectively. Demand is expected to fall after the Federal Reserve’s latest minutes showed that the central bankers expect greater economic growth and inflation.
Accordingly, the 5Y and 10Y spreads between the yield on the Lebanese Eurobonds and its US comparable widened from 415 basis points (bps) and 485 bps last week to 450 bps and 486 bps this week, respectively.
5 Year Credit Default Swaps, Mid-Prices (in basis points)
| 22/02/2018 | 15/02/2018 | |
| Lebanon | 488 | 478 |
| KSA | 82 | 81 |
| Dubai | 103 | 105 |
| Brazil | 157 | 154 |
| Turkey | 170 | 172 |
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 22/02/2018 | 15/02/2018 | Change | 22/02/2018 | 15/02/2018 | Change bps |
| 23/04/2019 | 5.5 | 98.88 | 99.38 | -0.50% | 6.50% | 6.04% | 46 |
| 20/05/2019 | 6 | 99.38 | 99.88 | -0.50% | 6.52% | 6.09% | 43 |
| 28/11/2019 | 5.45 | 98 | 98.63 | -0.64% | 6.66% | 6.27% | 40 |
| 09/03/2020 | 6.375 | 99 | 100 | -1.00% | 6.90% | 6.37% | 53 |
| 14/04/2020 | 5.8 | 97.75 | 98.75 | -1.01% | 6.94% | 6.42% | 52 |
| 19/06/2020 | 6.15 | 98.25 | 99.38 | -1.14% | 6.97% | 6.43% | 54 |
| 12/04/2021 | 8.25 | 103.13 | 104.5 | -1.31% | 7.11% | 6.64% | 47 |
| 04/10/2022 | 6.1 | 95.75 | 96.75 | -1.03% | 7.20% | 6.93% | 27 |
| 27/01/2023 | 6 | 94.88 | 95.88 | -1.04% | 7.25% | 7.00% | 25 |
| 22/04/2024 | 6.65 | 96 | 96.5 | -0.52% | 7.47% | 7.36% | 11 |
| 04/11/2024 | 6.25 | 93.5 | 94 | -0.53% | 7.50% | 7.40% | 10 |
| 03/12/2024 | 7.00 | 97.25 | 97.88 | -0.64% | 7.52% | 7.40% | 12 |
| 26/02/2025 | 6.20 | 92.88 | 93.25 | -0.40% | 7.53% | 7.45% | 8 |
| 12/06/2025 | 6.25 | 92.75 | 93 | -0.27% | 7.56% | 7.51% | 5 |
| 28/11/2026 | 6.60 | 93.13 | 93 | 0.14% | 7.69% | 7.71% | -2 |
| 23/03/2027 | 6.85 | 93.88 | 94 | -0.13% | 7.80% | 7.78% | 2 |
| 29/11/2027 | 6.75 | 92.75 | 92.75 | 0.00% | 7.82% | 7.82% | 0 |
| 03/11/2028 | 6.65 | 91.13 | 90.5 | 0.70% | 7.89% | 7.98% | -9 |
| 26/02/2030 | 6.65 | 89.88 | 89 | 0.99% | 7.97% | 8.10% | -12 |
| 22/04/2031 | 7.00 | 91.88 | 91 | 0.97% | 8.01% | 8.12% | -12 |
| 23/03/2032 | 7.00 | 91.5 | 90 | 1.67% | 8.02% | 8.21% | -19 |
| 02/11/2035 | 7.05 | 90.88 | 89.5 | 1.54% | 8.02% | 8.18% | -16 |
| 23/03/2037 | 7.25 | 91.75 | 90 | 1.94% | 8.11% | 8.30% | -20 |
