Eurobond market — Despite thin trading in the Eurobond market, the price of some sovereign bonds were marked down slightly as demand lacked, although the supply situation was no better off. Meanwhile, the current government seems to be preparing itself for a new Eurobond launch to be issued in Euro.
The new sovereign issue, expected to be lead-managed by German bank Commerzbank, will comprise about 200-250 million euros of short-term debt. The issue might be an extension to the previous euro-denominated paper that matures in 2004, with a coupon of 7.25 percent, although the new issue’s coupon rate is expected to be around 8.25 percent as euro rates have increased lately.
U.S. Treasuries overcame slippages in the first-half of the week to register gains by the close. The early falls came in the wake of the Fed’s Open Market Committee keeping short-term rates on hold. However, the FOMC’s tone signaled continuing concern over potential inflation.
This concern seemed to be borne out by the September non-farm payrolls report, showing a rise of 252,000, although average hourly earnings were up a mild 0.2 percent. The jobless rate fell to 3.9 percent — the lowest in 30 years. Nevertheless, Treasuries reversed initial losses as stocks tumbled and funds flowed into the safe-haven of government debt. – (Banque du Liban et d’Outre-Mer)