US Bond Yields shows an Upward Trend Amid an Incremental advance in the Labor Market’s Recovery
| 12/08/2021 | 05/08/2021 | Change | Year to Date | |
| BLOM Bond Index (BBI) | 12.84 | 12.96 | -0.91% | -9.41% |
| Weighted Yield | 87.72% | 87.34% | 0.43% | 4.86% |
| Weighted Spread | 8,766 | 8,729 | 0.42% | 5.90% |
| 12/8/2021 | 5/8/2021 | Change | |
| BBI | 12.84 | 12.96 | -0.92% |
| JP Morgan EMBI | 927.86 | 932.95 | -0.55% |
| 5Y LEB | 75.30% | 75.20% | 10 |
| 10Y LEB | 57.65% | 57.78% | -13 |
| 5Y US | 0.83% | 0.72% | 11 |
| 10Y US | 1.36% | 1.23% | 13 |
| 5Y SPREAD | 7,447 | 7,448 | -1 |
| 10Y SPREAD | 5,629 | 5,655 | -26 |
This week, the country continues to struggle economically and financially with further collapse of the currency in the parallel market, associated with the rise in inflation and shortages in electricity and basic goods. We are importantly in need of a government with a reforming plan which remains essential for support from external funding. The newly nominated Prime Minister Najib Mikati continues to work on forming a new government, however, no positive action seem to take place in the coming week.
As such, the BLOM Bond Index (BBI) which is BLOMInvest Bank’s market value-weighted index tracking the performance of the Lebanese government Eurobonds’ market (excluding coupon payments), decreased by 0.92% to stand at 12.84 points by the week ending August 12, 2021 compared to the week of August 5, 2021. Meanwhile, the JP Morgan EMBI slightly decreased from 932.95 to 927.86 during the period.
In addition, the yields on the 5 year (5Y) Lebanese Eurobonds rose by 10 basis points (bps) and 10 year (10Y) dropped by 13 basis points (bps) to end the period at 75.30% and 57.65%, respectively.
In the US, the yields on 5 year and 10 year US treasuries recorded a an increase from the week ending August 5, 2021 from 0.72% and 1.23% to 0.83% and 1.36%, respectively, by the week ending August 12. In details, US Initial unemployment claims totaled 375,000 in the period ended August 7, down 12,000 from the prior week as Labor Department data showed Thursday. Moreover, applications for U.S. state unemployment benefits dropped for the third week in a row, another incremental advance in the labor market’s recovery.
In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable dropped from 7,448 bps and 5,655 bps to 7,447 bps and 5,629 respectively.
| 5Y Credit Default Swaps (CDS) | ||
| 12/8/2021 | 5/8/2021 | |
| Lebanon | . | . |
| KSA | 55 | 56 |
| Dubai | 91 | 91 |
| Brazil | 179 | 181 |
| Turkey | 387 | 392 |
| Source: Bloomberg | ||
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 12/08/2021 | 05/08/2021 | Change | 12/08/2021 | 05/08/2021 | Change bps |
| 1/27/2023 | 6.00 | 12.29 | 12.56 | -2.15% | 238.79% | 231.83% | 695 |
| 4/22/2024 | 6.65 | 12.25 | 12.43 | -1.45% | 123.72% | 121.76% | 196 |
| 11/4/2024 | 6.25 | 12.29 | 12.58 | -2.34% | 103.26% | 101.22% | 204 |
| 12/3/2024 | 7.00 | 12.05 | 12.12 | -0.61% | 105.92% | 105.05% | 87 |
| 2/26/2025 | 6.20 | 12.43 | 12.57 | -1.05% | 95.09% | 93.94% | 115 |
| 6/12/2025 | 6.25 | 12.62 | 12.69 | -0.61% | 88.16% | 87.51% | 65 |
| 11/28/2026 | 6.60 | 12.41 | 12.46 | -0.37% | 72.53% | 72.21% | 32 |
| 3/23/2027 | 6.85 | 12.58 | 12.57 | 0.14% | 70.81% | 70.70% | 11 |
| 11/29/2027 | 6.75 | 12.42 | 12.59 | -1.30% | 66.62% | 65.92% | 70 |
| 11/3/2028 | 6.65 | 12.24 | 12.47 | -1.86% | 62.67% | 61.74% | 94 |
| 2/26/2030 | 6.65 | 12.13 | 12.32 | -1.50% | 59.71% | 58.89% | 82 |
| 4/22/2031 | 7.00 | 12.65 | 12.61 | 0.28% | 57.78% | 57.88% | -10 |
| 3/23/2032 | 7.00 | 12.48 | 12.51 | -0.26% | 57.62% | 57.43% | 18 |
| 11/2/2035 | 7.05 | 12.46 | 12.60 | -1.09% | 56.41% | 55.82% | 59 |
| 3/23/2037 | 7.25 | 12.78 | 12.76 | 0.18% | 56.52% | 56.58% | -6 |
Source: BLOMInvest Bank
