New Tax Reforms Push US Yields Higher
The Blom Bond Index (BBI) rose by a 0.53% over the week to stand at 103.33 points by January 18, 2018. The BBI slightly outperformed the JP Morgan Emerging Markets’ Bond Index (EMBI) which registered a 0.15% rise to stand at 808.89 points.
The BBI was supported by an increased demand on Lebanese Eurobonds maturing in 5 and 10 years (5Y and 10Y) as their respective yields slipped from last week’s 6.20% and 7.02%, to 6% and 6.94% this week.
As such, the 5Y and 10Y spreads between the Lebanese Eurobonds and their US comparable narrowed from last week’s 388 basis points (bps) and 448 bps to 357 bps and 431 bps, respectively.
After the passing of the tax bill in the US, investors are anticipating a boost in the economy that would lead to further interest rate hikes. Hence, demand for US treasuries weakened during the week allowing 10Y treasury yield to reach its highest since the Trump elections. Yields on the 5Y and 10Y US treasuries rose from 2.32% and 2.54% to 2.43% and 2.63%, respectively.
5 Year Credit Default Swaps, Mid-Prices (in basis points)
| 19/01/2018 | 19/01/2018 | |
| Lebanon | 440 | 463 |
| KSA | 83 | 82 |
| Dubai | 115 | 153 |
| Brazil | 147 | 147 |
| Turkey | 166 | 162 |
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 18/01/2018 | 11/01/2018 | Change | 18/01/2018 | 11/01/2018 | Change bps |
| 23/04/2019 | 5.5 | 100.31 | 100.25 | 0.06% | 5.24% | 5.29% | -5 |
| 20/05/2019 | 6 | 100.94 | 100.88 | 0.06% | 5.26% | 5.31% | -6 |
| 28/11/2019 | 5.45 | 100.13 | 100 | 0.13% | 5.37% | 5.45% | -7 |
| 09/03/2020 | 6.375 | 101.75 | 101.63 | 0.12% | 5.49% | 5.56% | -7 |
| 14/04/2020 | 5.8 | 100.19 | 100.13 | 0.06% | 5.70% | 5.73% | -3 |
| 19/06/2020 | 6.15 | 100.88 | 100.5 | 0.38% | 5.75% | 5.92% | -17 |
| 12/04/2021 | 8.25 | 106.75 | 106.25 | 0.47% | 5.92% | 6.10% | -18 |
| 04/10/2022 | 6.1 | 100 | 99 | 1.01% | 6.10% | 6.35% | -25 |
| 27/01/2023 | 6 | 99 | 97.75 | 1.28% | 6.23% | 6.53% | -30 |
| 22/04/2024 | 6.65 | 100.38 | 99.25 | 1.14% | 6.57% | 6.80% | -22 |
| 04/11/2024 | 6.25 | 98 | 97 | 1.03% | 6.62% | 6.81% | -19 |
| 03/12/2024 | 7.00 | 101.63 | 101 | 0.62% | 6.70% | 6.81% | -12 |
| 26/02/2025 | 6.20 | 96.75 | 96.13 | 0.64% | 6.78% | 6.89% | -11 |
| 12/06/2025 | 6.25 | 96.75 | 96.13 | 0.64% | 6.82% | 6.92% | -11 |
| 28/11/2026 | 6.60 | 98 | 97.5 | 0.51% | 6.90% | 6.98% | -8 |
| 23/03/2027 | 6.85 | 99.25 | 98.38 | 0.88% | 6.96% | 7.09% | -13 |
| 29/11/2027 | 6.75 | 98.38 | 97.38 | 1.03% | 6.98% | 7.12% | -14 |
| 03/11/2028 | 6.65 | 96.75 | 96.13 | 0.64% | 7.08% | 7.17% | -8 |
| 26/02/2030 | 6.65 | 94.75 | 94.5 | 0.26% | 7.31% | 7.34% | -3 |
| 22/04/2031 | 7.00 | 96.75 | 96.5 | 0.26% | 7.39% | 7.42% | -3 |
| 23/03/2032 | 7.00 | 96.25 | 96 | 0.26% | 7.43% | 7.46% | -3 |
| 02/11/2035 | 7.05 | 96.13 | 95.75 | 0.40% | 7.44% | 7.48% | -4 |
| 23/03/2037 | 7.25 | 96.5 | 95.75 | 0.78% | 7.60% | 7.68% | -8 |
