Lebanon’s bonds weathered the worst performance of regional markets in a year, beating OPEC member Qatar, as investors bet that Europe’s crisis won’t affect cash- rich domestic banks holding most of the country’s debt.
The average yield on regional sovereign bonds surged 18 basis points, the most since November 2010, to 5.15 percent on Oct. 4, according to the HSBC/NASDAQ Dubai Middle East Conventional Sovereign US Dollar Bond Index, as Europe’s debt crisis prompted investors to sell riskier emerging-market notes. The yield on seven of Lebanon’s bonds fell, while rising less than 10 basis points, or 0.10 percentage point, on its other 10 notes, the data show.
“I was buying and adding more Lebanese sovereign bonds since they seem relatively strong in this environment, like a relative safe haven,” Sergey Dergachev, who helps manage $8.5 billion of emerging-market bonds at Union Investment Privatfonds in Frankfurt, said by e-mail on Oct. 4. The bonds are “supported by huge cash at Lebanese banks and still solid inflows from the Lebanese diaspora.”
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