the lebanon weekly monitor - mofcomimages.mofcom.gov.cn/lb/201301/20130116170238851.pdf · p.8...

1Week 02 January 07 - January 13, 2013

JANUARY 07 - JANUARY 13, 2013

WEEK 02

Bank Audi sal - Audi Saradar Group - Group Research Department - Bank Audi Plaza - Bab Idriss - PO Box 11-2560 - Lebanon - Tel: 961 1 994 000 - email: [email protected]

CONTACTS

RESEARCH

Treasury & Capital Markets

Micky Chebli(961-1) [email protected]

Nadine Akkawi(961-1) [email protected]

Bechara Serhal(961-1) [email protected]

Private Banking

Toufic Aouad(961-1) [email protected]

Corporate Banking

Khalil Debs(961-1) [email protected]

Marwan Barakat(961-1) [email protected]

Jamil Naayem(961-1) [email protected]

Salma Saad Baba(961-1) [email protected]

Fadi Kanso(961-1) [email protected]

Nathalie Ghorayeb(961-1) [email protected]

Sarah Borgi(961-1) [email protected]

Marc Harb(961-1) [email protected]

Nivine Turyaki(961-1) [email protected]

LEBANON MARKETS: WEEK OF JANUARY 07 - JANUARY 13, 2013

The LEBANON WEEKLY MONITOR

Economy___________________________________________________________________________p.2 REAL ESTATE MARKET MAINTAINS MODEST ACTIVITY IN 2012The latest statistics published by the Directorate of Land Registry and Cadastre showed that in 2012, Lebanon’s property market managed to escape a contraction by reporting a modest growth amid the bouts of regional and local instabilities. Also in this issuep.3 Fiscal deficit up by 47.6% year-on-year in the first nine months p.4 Cleared checks slightly down by 1.0% in the first eleven months

Surveys___________________________________________________________________________p.5 LEBANON MAINTAINS ITS REGIONAL RANK BUT RETREATS GLOBALLY IN COUNTRY RISKEuromoney issued its latest country risk survey covering the fourth quarter of 2012 in which Lebanon ranked 100th out of 185 countries globally and 11th out of 17 countries regionally. Also in this issuep.6 HSBC pencils in a modest recovery for Lebanon in the medium term

Corporate News___________________________________________________________________________p.7 EFG-HERMES REITERATES "BUY" RATINGS ON BANK AUDI AND BLOM BANK AND "NEUTRAL" RATING ON BYBLOS BANK EFG-Hermes issued its 2013 Investment Perspectives report in which it reiterated its “buy” rating on Bank Audi and BLOM Bank and its “neutral” rating on Byblos Bank.

Also in this issuep.7 Al Habtoor Group eyes sale of Lebanese assetsp.8 Ashour Holding acquires shares in Lebanon’s Mövenpickp.8 Domestic carrier Middle East Airlines purchases ten Airbus aircraftsp.8 Lebanon’s 961 Beer launched in the United States

Markets In Brief___________________________________________________________________________p.9 RISING DEMAND FOR MEDIUM-TERM TO LONG-TERM EUROBONDSLebanese capital markets saw some appetite for medium to long-term papers on the Eurobond market, a shy activity on the equity market that was coupled by a small rise in prices, and a balanced activity on the FX market. In details, the BSE activity remained sluggish despite attractive market pricing ratios, with some shares trading at a P/BV of circa 1x while some others traded at a P/BV of below 1x. The total trading value was limited to US$ 2.8 million versus an average weekly value of US$ 7.8 million in 2012, while the price index edged up by 0.3% week-on-week. In parallel, the Eurobond market saw some local demand for medium to long-term categories, supported by the high level of FC primary liquidity at commercial banks. It is worth noting that the FC sovereign bonds-to-FC customer deposits ratio stood at 16.6% at end-November 2012, one of its lowest levels in more than a decade, mainly due to declines in international benchmark yields and a relatively modest growth in FC deposits in 2012. Besides local demand, some foreign funds underweighting Lebanon in their portfolios showed interest in Lebanese debt papers. As to the FX market, activity remained balanced, while the LP/US$ interbank rate fell to LP 1,501-LP 1,503 at the end of the week.



WEEK 02

ECONOMY_____________________________________________________________________________REAL ESTATE MARKET MAINTAINS MODEST ACTIVITY IN 2012

The latest statistics published by the Directorate of Land Registry and Cadastre showed that in 2012, Lebanon’s property market managed to escape a contraction by reporting a modest growth despite the bouts of regional and local instabilities. Activity hasn’t yet caught the levels reached during previous years.

In details, the value of property sales transactions increased by 3.8% to US$ 9,175 million in 2012, moving from US$ 8,841 million in 2011. Noteworthy is that such a rise stems from a low base as 2011 had seen a decline of 6.7% in the aforesaid value.

In parallel, real estate markets are still reporting a downward correction of volumes as the number of real estate transactions declined by 9.9% in 2012. This follows a drop of 11.0% posted in 2011. Also, sales to foreigners registered a decrease of 8.9% in the volume of sales, moving from 1,530 sales transactions in 2011 to 1,394 sales transactions in 2012.

Indeed, foreigners, and more particularly those of Arab origin are still somewhat hesitant from purchasing properties in the local market with demand mainly stemming from citizens. Accordingly, the growth of sales to foreigners has been slowing down especially within the context of an announcement issued by several GCC countries discouraging their nationals to visit Lebanon, and the decline in the number of Arabs visiting the country on account of weaker land travel (-20.8% year-on-year in the first eleven months of 2012).

Construction permits delivered by the Orders of Engineers in Beirut and Tripoli are showing similar trends. In fact, they posted a decline of 12.4% year-on-year during the first 11 months of 2012, with all regions to the exception of Bekaa showing a net contraction. This is also the case of cement deliveries which extended their decline by 6.5% year-on-year in the first ten months of 2012.

Sources: Directorate of Real Estate Registry and Cadastre, Bank Audi's Group Research Department

PROPERTY MARKET INDICATORS



WEEK 02

_____________________________________________________________________________FISCAL DEFICIT UP BY 47.6% YEAR-ON-YEAR IN THE FIRST NINE MONTHS

The Ministry of Finance’s latest statistics on Lebanon’s fiscal accounts showed that the shortfall sustained an upward trajectory within the context of a rise in expenditures surpassing that of revenues. As a matter of fact, the former went up by 10.8% while the latter increased by 3.4% to attain US$ 9,246 million and US$ 7,187 million respectively. Consequently, the fiscal deficit reported an increase of 47.6% year-on-year and reached US$ 2,059 million in the first nine months of 2012. The primary surplus, which excludes the debt service, was down by 58.1% over the same period and stood at US$ 649 million.

With regards to revenues, those classified under budget transactions increased by 4.0% year-on-year to total US$ 6,859 million most of which stemming from tax revenues. As a matter of fact, the latter amounted to US$ 5,244 million in the first nine months of 2012, up by 5.6% on an annual basis with miscellaneous taxes being the main contributor to this category (+9.3% year-on-year to US$ 2,488 million). As to non-tax revenues they remained more or less unchanged annually and amounted to US$ 1,615 million of which US$ 1,066 million were in the form of telecommunications revenues (-1.5% year-on-year). Pertaining to revenues stemming from treasury transactions, they were down by 8.7% to US$ 328 million in the first nine months of 2012.

On the expenditures side, those related to budget transactions declined by 4.8% year-on-year to US$ 7,454 million in the aforesaid period of 2012. General expenditures were down by a mere 2.8% as the 41.9% decline in spending from previous years’ budgets offset the 53.9% increase in the transfers to the national electricity company. Interest payments and foreign debt principal repayment were both down by 7.7% and 13.3%, respectively. Expenditures within treasury transactions increased by more than two-folds over the covered period to US$ 1,792 million during the first nine months of 2012.

FISCAL PERFORMANCE (FIRST NINE MONTHS OF THE YEAR)

Sources: Ministry of Finance, Bank Audi's Group Research Department



WEEK 02

______________________________________________________________________________CLEARED CHECKS SLIGHTLY DOWN BY 1.0% IN THE FIRST ELEVEN MONTHS

The latest data issued by the Association of Banks in Lebanon revealed that clearing activity, a composite indicator of consumption patterns, remained more or less jittery as demand be it for investment and to a lesser extent for consumption products was somewhat curtailed by the domestic and regional uncertainties.

In details, the amount of cleared checks reported a slight decline of 1.0% year-on-year to reach US$ 65,012 million in the first eleven months of 2012. This practical stagnation could be linked to a comparatively contained economic growth as locals are not keen on enhancing their expenditures within such an unstable environment.

A breakdown by currency shows that the amount of cleared checks in Lebanese pounds progressed by 5.9% year-on-year to LP 20,559 billion in the first eleven months of 2012 while that of cleared checks in US Dollars declined by 2.6% over the same period to US$ 51,357 million.

The dollarization ratio was more or less unchanged passing from 80.4% in the first eleven months of 2011 to around 80.0% in the same period of this year.

Sources: Association of Banks in Lebanon, Bank Audi's Group Research Department

CLEARED CHECKS (FIRST 11 MONTHS OF THE YEAR, US$ MILLION)



WEEK 02

SURVEYS_____________________________________________________________________________LEBANON MAINTAINS ITS REGIONAL RANK BUT RETREATS GLOBALLY IN COUNTRY RISK

Euromoney issued its latest country risk survey covering the fourth quarter of 2012 in which Lebanon ranked 100th out of 185 countries globally and 11th out of 17 countries regionally. Worldwide, its rank was down by two notches from September 2012 and regionally it remained unchanged over the same period. A look at the score shows that Lebanon posted a slight drop of 2.3% on a quarterly basis.

On an annual basis, Lebanon’s global position was down by 16 notches from the 84th rank posted in December 2011. Its score was also on the same path as it declined by 13.9% over the same period.

The survey assesses individual country risk by assigning a weighting to 6 categories covering political risk, economic performance, structural assessment, debt indicators, credit ratings and access to bank finance/capital markets.

The political risk, which accounts for 30% of the overall score, refers to corruption, government non-payments/non-repatriation, government stability, information access/transparency, institutional risk, and regulatory and policy environment. Lebanon’s score on political risk declined by a mere 0.1% relative to September 2012. Economic performance, which makes up 30% of the overall score, is based on bank stability and risks, GNP outlook, unemployment rate, government finances, monetary policy and currency stability. Lebanon’s score declined by 1.8% relative to the survey conducted in the third quarter of 2012.

Debt indicators (10% of the score) are calculated using the World Bank’s total debt stocks to GNP ratio, debt service to exports ratio, and current account balance to GNP ratio. Lebanon’s score declined by 16.5% relative to the previous study. Credit ratings (10% of the score) represent the nominal values assigned to sovereign ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings. Lebanon’s score was also unchanged in this category relative to the last survey.

RANKING OF MENA COUNTRIES IN EUROMONEY COUNTRY RISK

Sources: Euromoney, Bank Audi's Group Research Department



WEEK 02

Access to bank finance accounts and to capital markets account for 10%. Lebanon’s score within this category stood still on a quarterly basis. Finally, with respect to structural assessments, which accounts for 10% of the overall score and measures the effectiveness of the labor market, industrial relations and infrastructure, Lebanon’s score remained unchanged.______________________________________________________________________________HSBC PENCILS IN A MODEST RECOVERY FOR LEBANON IN THE MEDIUM TERM

HSBC issued its latest report on the MENA region in which it indicated that Lebanon would witness a modest recovery in 2013 and 2014 should the political situation stabilize and consumer spending as well as investor confidence report a cyclical upturn.

Yet, much is linked to the events in neighboring countries. Ongoing conflict could keep growth muted for longer, particularly if it begins to affect Lebanon more directly.

Indeed, the Euro zone crisis would have made 2012/2013 a challenging time for Lebanon even under normal circumstances, but the worsening of the Syria crisis has exacerbated pressures. Alongside other regional issues, this has contributed to a poor performance from the key tourism sector and hotel occupancy hovered around 30% in December 2012.

Other pointers, namely the coincident indicator, electricity production and construction permits have walked the same line. Meanwhile, growth would not be helped by a recent spike in inflation, a hump which is nonetheless painful for being the result of a one-off spike in housing costs, especially given that food inflation is also creeping up.

Against this backdrop, HSBC sees only a small improvement in growth over the short to medium term, and with elections due in the first half of 2013, there is likely to be further fiscal deterioration. Following the contraction in the deficit to 6% of GDP in 2011, HSBC sees a return to the 7-8% of GDP area in 2012/2013. The polls are also likely to be followed by a lengthy period of negotiations before a government is formed further adding to an environment of uncertainty and policy stagnation.

LEBANON'S ECONOMIC GROWTH AND BUDGET BALANCE

Sources: HSBC, Bank Audi's Group Research Department



WEEK 02

CORPORATE NEWS_____________________________________________________________________________EFG-HERMES REITERATES "BUY" RATINGS ON BANK AUDI AND BLOM BANK AND "NEUTRAL" RATING ON BYBLOS BANK

EFG-Hermes issued its 2013 Investment Perspectives report in which it reiterated its “buy” rating on Bank Audi and BLOM Bank and its “neutral” rating on Byblos Bank.

EFG-Hermes sees a fair value of US$ 7.4 per share for Bank Audi, against a price of US$ 6.0 per share as at December 04, 2012, implying an upside potential of 23.3%. Bank Audi is Lebanon’s largest bank by assets, with leading market shares in loans and deposits. Bank Audi has pursued a regional expansion strategy since 2004. The bank has now banking subsidiaries in Egypt, Syria and Sudan, is present through branches and representative offices in the UAE and Jordan, and has also set up subsidiaries/investment companies in Qatar and Saudi Arabia. Most recently, Bank Audi launched a greenfield banking operation in Turkey. Regional entities account for roughly 18% of the group’s earnings, demonstrating the bank’s success in diversifying its earnings profile. Loan growth momentum has slowed considerably since 2011, however, due to the unsettled political climate in a number of MENA countries, especially in Syria. Profitability and revenue generation have remained strong nevertheless, as per EFG-Hermes.

EFG-Hermes sees a fair value of US$ 9.09 per share for BLOM Bank, against a price of US$ 7.8 per share as at December 04, 2012, implying an upside potential of 16.5%. BLOM Bank is Lebanon’s second largest bank by assets and enjoys one of the strongest deposit franchises in Lebanon. BLOM’s loan-to-deposit ratio (28% in 2011) is below the sector average, and the bank has a larger proportion of interbank assets (mainly in USD) to total assets than its main peers. BLOM Bank has over the past few years focused on growing its loan book due to the currently low level of USD LIBOR and expectations that USD rates will remain low in the medium term. BLOM Bank has since 2006 embarked on a regional expansion plan into markets offering strong growth prospects, and is now present in Egypt and Syria. BLOM Bank’s ROE is above the Lebanese banking sector average, owing to its superior cost efficiency. According to EFG-Hermes, current valuations do not reflect the bank’s strong franchise in Lebanon and its medium-term regional growth prospects.

EFG-Hermes sees a fair value of US$ 1.68 per share for Byblos Bank, against a price of US$ 1.51 per share as at December 04, 2012, implying an upside potential of 11.3%. Byblos Bank is Lebanon’s third largest bank by assets, with 15% estimated market share. It enjoys a strong positioning and brand name in the consumer and SME segments. To overcome the Lebanese market’s relatively mature status, Byblos Bank has embarked on an ambitious regional expansion plan into countries with less penetrated banking systems and low levels of competition, and/or where there is a significant Lebanese expatriate base. Byblos Bank’s larger foreign entities are Syria and Sudan, but the bank is also present in Armenia, the Democratic Republic of Congo, Nigeria, Jordan, the UAE and Iraq. The bank has shown strong growth in assets and earnings over the past three years. Growth momentum has slowed down this year due to the deceleration in investment and private consumption in Lebanon and regional markets on political uncertainties, as per EFG-Hermes._____________________________________________________________________________AL HABTOOR GROUP EYES SALE OF LEBANESE ASSETS

Dubai-based conglomerate Al Habtoor Group announced that it might be selling its Lebanese assets including two hotels and a shopping mall, after it was approached by regional investors.

As a matter of fact, several Middle East and Lebanon-based investment firms have contacted the Al Habtoor Group to purchase the Hilton Beirut Metropolitan Palace, Hilton Beirut Habtoor Grand and the Le Mall shopping centre, as per company officials.

Al Habtoor Group recently postponed plans to list its shares in what would have been one of the largest initial public offerings (IPOs) in the UAE’s recent history. The Dubai-based group said it was planning to raise up to US$ 1.6 billion by floating on the NASDAQ Dubai in either March or September 2013 but delayed the plans.



WEEK 02

_____________________________________________________________________________ASHOUR HOLDING ACQUIRES SHARES IN LEBANON’S MÖVENPICK

Kingdom Hotel Investments (KHI), a wholly-owned subsidiary of the Saudi group Kingdom Holding Company (KHC) sold its shares in Mövenpick Hotel, Beirut to a Lebanese firm termed Ashour Holding, as per newswires. The company bought the shares for US$ 134 million, as per the same sources.

KHC had taken KHI public in the Dubai stock market in 2006, then private again in June 2010. It is now divesting some of its assets to realize profits for its shareholders.

KHI has recently sold its Mövenpick Resort & Spa in Thailand to the Malaysian firm TA Global.

Headquartered in Dubai, KHI is a global hotel and resort acquisition and development company focused on high growth emerging markets, such as the Middle East, Asia, and Africa. The company has ownership interests in 21 properties in 14 countries, including 19 operating hotels and resorts, and two currently under construction._____________________________________________________________________________DOMESTIC CARRIER MIDDLE EAST AIRLINES PURCHASES TEN AIRBUS AIRCRAFTS

Lebanon’s national carrier Middle East Airlines (MEA) concluded an agreement with Airbus to purchase ten A320 neo planes for US$ 1.1 billion, as per newswires. This step comes in line with the airline’s aim to purchase planes offering fuel burn saving, high reliability as well as a modern and comfortable cabin.

To date, Airbus has recorded 8,900 orders for aircraft from the A320 family and has delivered over 5,300 globally. The A320neo will deliver fuel savings of 15% and an additional flight distance of 500 nautical miles (950 km), or the ability to carry two tons more payload at a given range.

MEA had scrapped plans for a partial initial public offering (IPO) because of unfavorable market conditions. The IPO would have seen the listing of 25% of the carrier on the Beirut Stock Exchange.

However, domestic political tensions coupled with the debt crisis in Europe and the regional popular uprising have deterred those plans. MEA, owned by the Central Bank of Lebanon, has a fleet of 18 Airbus SAS planes (A330-200s, A321s and A320s) and flies to more than 38 destinations._____________________________________________________________________________LEBANON’S 961 BEER LAUNCHED IN THE UNITED STATES

Starting January 2013, American consumers started having access to the Lebanese beer, 961 Beer. Founded in 2006, the brewery began as an experiment among friends and has grown to produce 300,000 cases annually, as per newswires.

961 Beer was named after the international dialing code for Lebanon. The brands include: Lager, Red Ale, Porter, Witbier and Lebanese Pale Ale.

961 Beer will first be available along much of the East Coast, in states including Rhode Island, Massachusetts, Connecticut, Maryland, Pennsylvania, New York, New Jersey, Virginia, Delaware and Washington, D.C. Subsequently shipments will expand the brewery’s reach further before the end of the year.

961 Beer began as one of the world’s smallest microbreweries. From 20-liter kettles on home stoves, the brewery has expanded to meet demand and now brews nearly 300,000 cases annually. Focused on traditional techniques and quality ingredients the brewery is located in the foothills of Mazraat Yachouh, as per newswires.



WEEK 02

CAPITAL MARKETS_____________________________________________________________________________MONEY MARKET: LP 11,459 BILLION GROWTH IN MONEY SUPPLY (M4) IN 2012

The sustained balanced activity on the foreign exchange market kept the local currency liquidity quite abundant on the money market. Within this context, the overnight rate remained stable at its low official level of 2.75% set by the Central Bank of Lebanon. As to Certificates of Deposits, the Central Bank of Lebanon sold this week LP 15 billion that were distributed as follows: LP 5 billion in the 45-day category and LP 10 billion in the 60-day category. Interest rates on the 45-day and 60-day CDs categories remained stable at 3.57% and 3.85% respectively.

At the monetary aggregates level, figures for the week ending 27th of December 2012 released this week showed a rise in local currency deposits of LP 79 billion, as a result of a growth of LP 34 billion in LP time deposits and an increase of LP 45 billion in LP demand deposits week-on-week. Deposits in foreign currencies went up by US$ 100 million. These weekly variations compare to an average weekly increase of LP 112 billion for LP deposits, and an average weekly rise of US$ 48 million for foreign currency deposits since the beginning of the year 2012. Total money supply in its large sense (M4) expanded by LP 268 billion week-on-week. This compared to an average weekly growth of LP 191 billion since the beginning of the year.

On a cumulative basis, money supply in its large sense (M4) grew by LP 11,459 billion in 2012. This is the result of a rise in local currency denominated time deposits of LP 6,768 billion, an increase in foreign currency deposits of LP 3,884 billion (the equivalent of US$ 2,577 million), an expansion in money supply (M1) of LP 700 billion, and a growth in Treasury bills held by the public of LP 107 billion.

_____________________________________________________________________________TREASURY BILLS MARKET: NOMINAL SURPLUS OF LP 18 BILLION OVER THE FIRST WEEK

The secondary Treasury bills market saw this week some demand for long-term papers, especially the 8-year and 10-year categories. At the level of the primary market, the latest auction’s results (January 10, 2013) showed stability in the average yields on the one-year, two-year and three-year categories at 5.35%, 5.84% and 6.50% respectively.

On the other hand, the auction results for value date 3rd of January 2013 released by the Central Bank of Lebanon showed that total subscriptions amounted to LP 315 billion and were distributed as follows: LP 74 billion in the three-month category, LP 59 billion in the six-month category, and LP 182 billion in the five-year category. These compare to maturities of LP 297 billion, resulting in a nominal surplus of LP 18 billion.

INTEREST RATES

Source: Bloomberg



WEEK 02

TREASURY BILLS

Sources: Central Bank of Lebanon, Bloomberg_____________________________________________________________________________FOREIGN EXCHANGE MARKET: CENTRAL BANK OF LEBANON REMAINS ON THE SIDELINES

The foreign exchange market started the week with some demand for the US Dollar, which triggered a rise in the LP/US$ interbank rate to LP 1,508-LP 1,511on Monday. However, the said rate started to see gradual declines thereafter due to some US Dollar offers, as some market players opted to secure enough LP liquidity at hand to pay VAT. In fact, the LP/US$ interbank rate fell to LP 1,501-LP 1,503 on Friday. In all cases, the Central Bank of Lebanon remained on the sidelines.

EXCHANGE RATES

Source: Bank Audi’s Group Research Department_____________________________________________________________________________STOCK MARKET: SMALL RISE IN BSE PRICE INDEX OF 0.3%

Activity remained sluggish on the equity market during this week due to low investors’ appetite despite attractive market pricing ratios. The total trading value amounted to US$ 2.8 million this week versus US$ 1.5 million during the previous three-day week. The average daily trading value rose from US$ 489 thousand last week to US$ 556 thousand this week, which resulted into a 13.9% increase in the trading volume index to close at 23.45. As far as prices are concerned, the BSE price index edged up by 0.3% week-on-week to close at 108.88.

Solidere shares accounted for 40.2% of activity. Solidere “A” share price nudged down by 0.2% to US$ 12.82, and Solidere “B” share price decreased by 0.5% to close at US$ 12.78. The banking shares captured



WEEK 02

EUROBONDS INDICATORS

Source: Bank Audi’s Group Research Department

AUDI INDICES FOR BSE

Sources: Beirut Stock Exchange, Bank Audi’s Group Research Department

59.3% of the total trading value. Bank Audi’s “listed” share price fell by 1.0% to close at US$ 6.15. Bank Audi’s GDR price surged by 3.9% to US$ 6.40. BLOM’s “listed” share price edged up by 0.3% to US$ 7.92. BLOM’s GDR price rose by 1.8% to close at US$ 8.14. Byblos Bank’s “listed” share price increased by 0.6% to US$ 1.61. BEMO’s share price grew by 0.5% to US$ 1.84. As to industrial stocks, Holcim’s share price increased by 0.3% to US$ 15.80.

All in all, the Beirut Stock Exchange performed relatively similarly to other emerging markets, as reflected by stability in the S&P Emerging Market Composite Index. However, it lagged behind other Arabian markets, as shown by a 2.1% rise in the S&P Pan-Arab Composite Index.

_____________________________________________________________________________BOND MARKET: AVERAGE YIELD DECLINES BY 7 BPS WEEK-ON-WEEK

The Eurobond market saw some local demand for medium-term to long-term papers that are due to mature between 2017 and 2027, within the context of a high level of FC primary liquidity that has reached US$ 37.5 billion at end-November 2012, in addition to some foreign demand for these papers as some funds underweight Lebanon in their portfolios.

The average yield declined by 7 bps to 4.27%, while the average spread remained stable at 325 bps, due to a decline in Lebanese and international benchmark yields. For instance, the five-year US Treasuries yield decreased from 0.85% last week to 0.79% this week after factory output in Spain declined more than analysts forecast and inflation accelerated in China, curbing a rally in higher-yielding assets. As to the cost of insuring debt, Lebanon’s five-year CDS spreads remained stable at 410-430 bps this week.



WEEK 02

INTERNATIONAL MARKET INDICATORS

Sources: Bloomberg, Bank Audi's Group Research Department

___________________________________________________________________________DISCLAIMER

The content of this publication is provided as general information only and should not be taken as an advice to invest or engage in any form of financial or commercial activity. Any action that you may take as a result of information in this publication remains your sole responsibility. None of the materials herein constitute offers or solicitations to purchase or sell securities, your investment decisions should not be made based upon the information herein.

Although Bank Audi Sal Audi Saradar Group considers the content of this publication reliable, it shall have no liability for its content and makes no warranty, representation or guarantee as to its accuracy or completeness.

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