TB purchase subscriptions fell markedly at the January 18 auction, shedding 36.92 percent to land at LP402.18 billion ($266.8 million) with maturing bills losing 42.87 percent to LP249.75 billion ($165.7 million), thus causing the purchase surplus of subscriptions over maturities to reach LP152.43 billion ($101.1 million).
Demand for TBs was down on January 18th, with local banks remaining almost exclusively the sole buyers. A limited rebalancing of banks’ portfolios took place at the January 18th auction, with the share of the 24-M and 12-M TBs regaining 7 percentage points from the week before, to settle at 41.35 percent and 24.73 percent respectively. The weight of 6-M TBs fell to 17 percent after booming up to 35.1 percent the week before. Short-term TBs saw their share of total subscriptions rise to 16.9 percent from 13.3 percent previously. There was no interest in the BDL’s LP certificates of deposit this week due to lack of demand.
After last week’s unusual bond activity, trading in Lebanese debt instruments returned to their characteristic calm status, as market players awaited a new sovereign issue. The Finance Ministry is expected to reopen and tap a previously issued eurobond amounting to between $100 million, and $200 million. Market sources revealed that Banque de la Mediterranee is planning to issue a $50 million four-year debt to be lead-managed by Paribas, but is still waiting for the government to launch a new sovereign issue before going ahead with its own debt issue. This will mark the bank’s first eurobond issue since September 1999, when it sold $125 million of three-year euro certificates of deposits with a coupon of 8.75 percent.
US Treasuries rose on Thursday, January 25, after Federal Reserve Chairman Alan Greenspan testified to the Senate Committee that the US economy was near standstill, underlining prospects for a sharp Fed interest-rate cut at the Fed’s next monetary policy meeting Jan 30-31. However, at close, Treasuries slipped down as investors shifted towards higher-yielding corporate bonds, as corporations sold $83.05 billion in bonds this month. Federal funds future contracts, a market gauge of expected Fed policy, stabilized at around 90 percent likelihood of a 50 basis points rate cut next week.
The government reported that the fourth quarter Employment Cost Index (ECI), a key gauge of wage pressure, rose by only 0.8 percent, lower than the 1.1 percent expected by analysts. — ( Banque du Liban et d'Outre-Mer Sal )
© 2001 Mena Report (www.menareport.com)
