In the wake of the previous week’s rates cut in the U.S., the rare sight of a number of price changes was witnessed in the Lebanese eurobond market, and it was not confined to sovereign bonds alone. Lower yields in the U.S. market have made emerging market bonds more attractive, while the expectation of a further rates cut in the U.S. may well consolidate the trend.
The only losers were the 03 floating rate notes of the Republic, Credit Libanais and Bank of Beirut, hampered by lower LIBOR rates following the U.S. rate move. U.S. Treasuries moved into negative territory, weighed down partly by $36bn in corporate and agency debt flooding the market this week.
Additionally, stronger-than-expected retail sales and wholesale inflation data released this week raised doubts as to how far the Federal Reserve might cut rates later this month. Retail sales rose 0.1 percent in December 2000 against an expected drop of 0.4 percent, while the December Producer Price Index remained unchanged after rising 0.1 percent in November 2000. The data appears to support the growing opinion that while the economy is slowing down it is not heading for recession. — ( Banque du Liban et d'Outre-Mer Sal )
© 2001 Mena Report (www.menareport.com)
