Bank Audi weekly report: the final price of Eurobond prices is set at 14.125%

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With the approval of a series of draft laws and proposals in the two legislative sessions held this week, and the impact of the new campaign on the Governor of the Bank of Lebanon, and in light of the issuance of new circulars from the Central Bank, they are required to pay incoming transfers in foreign currencies to non-bank institutions in the Lebanese pound and pay cash withdrawals from bank accounts in foreign currencies in pounds. , This week, the Lebanese financial markets witnessed a dramatic decline in the exchange rate of the lira against the dollar to unprecedented levels, and price shrinkage in the Eurobond bond market, while the stock market recorded increases in prices. , According to the weekly report of the Bank Audi. In detail, the Lebanese pound continued its decline against the dollar, reaching 4000 LBP. For one dollar, while the Bank of Lebanon set the dollar exchange rate for electronic cash transfers received from abroad for Friday, April 24, 2020 at 3625 LL, knowing that this price will be set daily. In the Eurobond bond market, the final price of Lebanese Eurobonds was set at 14.125%, according to a tender for credit risk conducted on April 23, 2020. As for the stock market, the price index recorded a weekly increase of 1.2%, supported by increases in the price of Solidere shares. Note that the activity remained shy, and trading was limited to only three out of 26 listed shares.

Markets

In the money market: With the continued availability of liquidity in the Lebanese pound in the money market, the interest rate from day to day remained stable this week at its lowest levels of 3%. In parallel, the latest monetary statistics issued by the Bank of Lebanon for the week ending April 9, 2020 showed a decrease in resident bank deposits of 302 billion pounds. This contraction is attributed to a decrease in deposits in pounds, which amounted to 640 billion pounds, amid a decline in savings deposits in pounds, at a value of 306 billion pounds, and a decrease in demand deposits in pounds, by 334 billion pounds, while deposits resident in foreign currencies increased by 338 billion pounds (equivalent to $ 224 million dollars). ). In this context, the monetary mass in its broad sense (M4) recorded a weekly contraction of 169 billion pounds amid an increase in the volume of cash in circulation of 363 billion pounds and a decrease in Treasury bonds written by the non-banking sector at a value of 230 billion pounds. On an annual level, the monetary block with its narrow concept (M1) registered a remarkable expansion in the week ending April 9, 2020, with 97.5% compared to April 9, 2019, while the resident savings deposits in the lira shrank by 42.6%, and the deposits in foreign currencies recorded a shy annual expansion of 0.8%.

In the Treasury Bond Market: The preliminary results of the tenders on April 23, 2020 showed that the Bank of Lebanon allowed banks to subscribe to all of its proposals in the six-month category (4.0% return), the three-year category (with a return of 5.50%) and the seven-year category (with a return of 6.50%). To that, the results of the tenders on April 16, 2020 showed subscriptions worth 91 billion pounds distributed between 7 billion pounds in the three-month category (with a return of 3.50%) and 0.2 billion pounds in the year category (a return of 4.50%) and 84 billion pounds in the five-year category ( 6.0% return). In contrast, benefits worth 93 billion pounds emerged, resulting in a shy weekly nominal deficit of about 2 billion pounds.

In the exchange market: On April 21, 2020, the Banque du Liban issued a basic circular No. 151 concerning the customer who does not benefit from the provisions of the decision regarding small depositors, where the central bank asked banks to pay any cash withdrawals or fund operations from the accounts belonging to the customer in dollars or foreign currencies in a manner equivalent to their value In Lebanese pounds according to the market price, according to the procedures and limits approved by the bank in question, provided that the maximum limit for withdrawals does not exceed five thousand dollars per month. On 16 April 2020, the Banque du Liban issued an intermediate circular No. 551 requiring non-bank institutions that carry out cash transfers to pay the value of any cash transfer in foreign currencies received from abroad in Lebanese pounds according to the market price. In the parallel market, the Lebanese pound continued its decline against the dollar in a dramatic fashion, touching 4000 LBP. For one dollar, knowing that the official price is still at 1507.5 LBP. Moreover, the Bank of Lebanon’s last bi-monthly budget ending on April 15, 2020 showed that the central assets of the Central Bank declined by $ 559 million during the first half of April to reach about $ 34.7 billion in the middle of the month, and it compared with $ 37.3 billion at the end of the year 2019.

On the stock market: Trading on the Beirut Stock Exchange was limited to only three out of 26 listed shares (“Audi Bank Regular” shares and Solidere shares). Solidere A shares recorded a weekly increase in prices of 3.2% to close at $ 10.47, and Solidere B shares increased by 5.3% to $ 10.50, while Bank Audi’s regular share prices remained stable at $ 1.30. This pulled out a weekly rise in the price index of 1.2%. Regarding the trading volumes on the stock exchange, the nominal value of trading amounted to about $ 3103,000 this week compared to $ 2808,000 in the previous week, knowing that it is the activity mostly focused in Solidere shares.

On the Eurobond bond market: On April 23, 2020, a tender related to credit risk took place, with the final price of Lebanese Eurobonds being set at 14.125%. This means that debt insurance holders will obtain 86% of the specified values ​​according to these instruments, ie $ 215 million. In this climate, the sovereign debt bonds maturing between 2020 and 2037 recorded weekly price shocks ranging from $ 1.75 to $ 4.0. Therefore, the prices of the Lebanese debt securities ranged between 14.50 cents for the dollar and 15.25 cents for the dollar this week.

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