Lebanese Treasury Bills (TB) subscriptions resumed their increase as they gained 15.73 percent at the January 11 auction, to LP637.63 billion ($422.97 million), while maturing bills rose 3.34 percent to LP437.14 billion ($289.98 million), thus resulting in a LP200.5 billion ($13.3 million) surplus.
Subscriptions have been given a boost to a certain extent by more favorable interest rate spreads between the local currency and the U.S. dollar. At the same time, investor confidence has gradually risen over recent weeks as signs of a more conducive environment for the private sector have emerged, highlighted in the 2001 draft budget released by the Ministry of Finance.
Reshuffling of portfolios continued this week as investors turned their attention from long-term TBs in order to purchase short-term 6-M TBs. The weight of the 24-M TB lost more than 16 percentage points to 34 percent while the 12-M TB’s share fell to 17.6 percent from 19.8 percent a week before. Benefiting from these drops were the short-term 6-M TBs, which saw their share of total subscriptions rise to 35.1 percent from 9.1 percent on January 4th. The BDL sold LP5 billion ($3.33 million) worth of certificates of deposit this week, LP3 billion ($1.99 million) of the 45-day maturity and LP2 billion ($1.33 million) in 60-day CDs.
In contrast with most weeks, a pick up in activity was witnessed on Lebanese sovereign bonds with maturities between 2002 and 2005 as yield spreads with U.S. Treasuries have widened. Attention in the Eurobond market was also focused on the intention of the government to issue a new eurobond, as the 2001 draft budget called for the issuance of up to $2 billion in new eurobonds this year, including issues with maturities of up to 30 years.
The government issued about $1.4bn worth of eurobonds last year compared to $1.9 billion in 1999, confirming its status as the leading sovereign issuer in the MENA region. After witnessing a three-day surge in prices, US Treasuries ended a strong week by stepping back, as bond investors and dealers shifted their interest towards shorter-dated papers, after signs of decrease in consumer confidence and a 5.7 percent rise in oil prices were reported.
The University of Michigan’s consumer sentiment index, a key indicator of consumer spending, fell to 93.6 from 98.4 in December, the weakest level of consumer confidence in four and a half years. Furthermore, the Federal Reserve monthly Beige report showed a decrease in industrial production by 0.6 percent in December compared to a 0.3 percent drop in November. The report also showed that only the tourism, oil, and gas drilling sectors were immune from the slowing economy last December. — ( Banque du Liban et d'Outre-Mer Sal )
© 2001 Mena Report (www.menareport.com)
