The LEBANON WEEKLY MONITOR

CONTACTS The LEBANON WEEKLY MONITOR Treasury & Capital Markets Bechara Serhal (961-1) 977421 bechara.serhal@banqueaudi.com Nadine Akkawi (961-1) 977401 nadine.akkawi@banqueaudi.com Private Banking Toufic Aouad (961-1) 954922 toufic.aouad@bankaudipb.com Corporate Banking Khalil Debs (961-1) 977229 khalil.debs@asib.com RESEARCH Marwan Barakat (961-1) 977409 marwan.barakat@banqueaudi.com Jamil Naayem (961-1) 977406 jamil.naayem@banqueaudi.com Salma Saad Baba (961-1) 977346 salma.baba@banqueaudi.com Fadi Kanso (961-1) 977470 fadi.kanso@banqueaudi.com Gerard Arabian (961-1) 964047 gerard.arabian@banqueaudi.com Economy p.2 AN ATYPICAL YEAR FOR ALPHA BANKS AMID BOTH OPPORTUNITIES AND CHALLENGES The Alpha Report, outlining the performance and positioning of the first 14 banks in Lebanon with deposits exceeding US$ 2 billion and issued by Bankdata Financial Services suggests that 2016 was an atypical year for Alpha Banks amid both opportunities and challenges. Also in this issue p.3 Gross public debt at US$ 76.2 billion at end-january 2017 p.4 Value of Kafalat guarantees down by 32.9% year-on-year in the first two months of 2017 Surveys p.5 NEW EUROBOND ISSUE TO BE WELL RECEIVED BY BOTH ONSHORE AND INTERNATIONAL INVESTORS, AS PER STANDARD CHARTERED Lebanon s sovereign curve currently trades wider than the EMBI average, offering an 85 bps pick-up over JP Morgan Emerging Markets Bond Index (EMBI) spreads, versus trading flat to tighter until end- 2015, according to Standard Chartered s Credit Alert report. Also in this issue p.6 Government of Lebanon rating affirmed at B2/Negative, as per Moody s Corporate News p.7 FRANSABANK S NET PROFITS RISE BY 11.8% TO US$ 200.8 MILLION IN 2016 Fransabank posted net profits of US$ 200.8 million in 2016, up from US$ 179.6 million in 2015, as per Bankdata Financial Services. Also in this issue p.8 Net profits of SGBL up by an annual 18.0% to US$ 200.7 million in 2016 Markets In Brief p.9 FOREIGN SELL-OFF TENDENCY IN THE EUROBOND MARKET Along with military and security appointments and the finalization of Wage Scale by Joint Parliamentary Committees, Lebanon s capital markets saw this week further contractions in bond spreads, shy equity price gains and sustained balanced FX activity. In details, the bond market saw further price declines, as some foreign market players opted to leave room for the new bond issue, while tracking US Treasuries move. The weighted average bond spread contracted for the seventh consecutive week to reach 340 bps, its lowest level since end-july 2015, amid higher increases in US Treasuries yields. On the equity market, activity remained sluggish. The BSE total trading value was limited to US$ 2.9 million, up by 19.7% week-on-week, and the price index edged up by 0.5%. At the level of the FX market, activity remained balanced and the LP/US$ interbank rate continued to hover between LP 1,514 and LP 1,514.50. Farah Nahlawi (961-1) 959747 farah.nahlawi@banqueaudi.com Anthony Badr (961-1) 964714 anthony.badr@banqueaudi.com LEBANON MARKETS: WEEK OF MARCH 06 - MARCH 12, 2017 Nivine Turyaki (961-1) 959615 nivine.turyaki@banqueaudi.com Bank Audi sal - Group Research Department - Bank Audi Plaza - Bab Idriss - PO Box 11-2560 - Lebanon - Tel: 961 1 994 000 - email: research@banqueaudi.com 1

ECONOMY _ AN ATYPICAL YEAR FOR ALPHA BANKS AMID BOTH OPPORTUNITIES AND CHALLENGES The Alpha Report, outlining the performance and positioning of the first 14 banks in Lebanon with deposits exceeding US$ 2 billion and issued by Bankdata Financial Services for the fourth quarter of 2016. Alpha Banks actually registered in 2016 a satisfactory activity growth in a tough operating environment. Consolidated assets of Alpha banks increased from US$ 203.7 billion at end-december 2015 to US$ 216.9 billion at end-december 2016, corresponding to a rise of US$ 13.2 billion, i.e. a growth of 6.5%. This performance was nonetheless impacted by the 10.6% nominal decline in foreign activity as a result of the depreciation of respective currencies in main markets of presence, namelythe Egyptian Pound and the Turkish Lira which exchange rates lost 58% and 18% respectively versus the US Dollar in 2016, which reflect on the conversion of these assets within the overall consolidation. Consolidated deposits, which account for 81% of total activity, followed the same performance. While foreign deposits dropped by a nominal 12.3%, again driven by currency fluctuations, domestic deposits rose by 7.5%. It is worth mentioning that the growth in domestic deposits was mainly driven by FX deposits which grew by 9.2% while LL deposits increased by 4.5%, thus raising deposit dollarization over the year. The growth in FX deposits was mainly tied to the attractive packages some banks have been offering to their customers that would draw on their non-resident accounts and which were linked to the financial engineering operations of the Central Bank. At the level of lending activity, loans to the private sector reported a relatively mild growth of 2.2% in 2016 in an environment of sluggish economic conditions restricting lending opportunities. The currency structure of domestic lending suggests that LL loans grew by a significant 13.5%, while FX loans rose by a mere 1.4%. The double-digit growth in LL loans was supported by the attractive stimulus packages in Lebanese Pounds, in addition to the excess liquidity in LL created by BDL swaps. It is worth mentioning in this respect that net primary liquidity in LL as a percentage of LL deposits rose from 18.0% at end-2015 to 40.5% at end-2016. ALPHA BANKS RANKING BY MAJOR AGGREGATES AS AT END-DECEMBER 2016 Source: Bankdata Financial Services 2

In parallel, Alpha banks realized a slight improvement in lending quality over the year. The ratio of gross doubtful loans to gross loans retreated from 5.51% at end-december 2015 to 5.38% at end-december 2016. Concomitant to that direction, with loan loss reserves covering 75.62%% at end-2016, against 73.98% at end-2015, the ratio of net doubtful loans to total loans contracted from 1.43% to 1.31%. More importantly, collective provisions reached a record high in absolute and relative terms, covering 1.23% of the net loan portfolio, as BDL requested Lebanese banks to mainly allocate the exceptional revenues from BDL swaps to collective provisions prior to IFRS 9 implementation in 2018. At the profitability level, the year 2016 characterized by a significant growth in net fee and commission income, driving a double-digit growth in operating income and offsetting a significant growth in operating expenses and income taxes, all leaving an 11.9% rise in bottom line. Subsequently, return ratios relatively improved, with the return on average assets rising from 1.02% to 1.08% and the return on average equity increasing from 11.47% to 11.77% (13.02% for the return on average common equity. The components of return ratios suggest that asset utilization rose significantly from 2.84% to 3.46% driven mainly by the noticeable increase in non-interest income to average assets from 0.94% to 1.53%, while interest margins maintained somewhat stable levels. Yet, the net operating margin fell from 35.86% to 31.20%, driven by a rise in credit cost from 7.51% to 10.92% and an increase in tax cost from 7.96% to 10.03%, thus dampening the rise in return ratios and keeping them still below the cost of equity of Alpha banks. In brief, the year 2016 was an atypical year for Alpha banks that faced arising internal opportunities in an evolving domestic environment, coupled with the challenges of tough operating conditions in a number of foreign markets of presence. GROSS PUBLIC DEBT AT US$ 76.2 BILLION AT END-JANUARY 2017 The data published by the Ministry of Finance in Lebanon showed that the country s gross debt reached US$ 76.2 billion at end-january2017, up by 1.7% from the level seen at end-2016, and up by 7.9% from the level registered at end-january2016. Domestic debt was higher by 2.6% from end-2016 and by 10.3% from end-january 2016 to reach a total of US$ 48.0 billion at end-january2017. Lebanon s external debt grew by 0.3% from end-2016 and by 3.9% from end-january2016 to stand at around US$ 28.2 billion at end-january2017. GROSS PUBLIC DEBT (US$ BILLION) Sources: Association of Banks in Lebanon, Bank Audi's Group Research Department 3

In this context, the public sector deposits at the Central Bank rose by 28.0% from end-2016 and by 27.7% from end-january 2016 to stand at US$ 7.1 billion. Public sector depositsat commercial banks edged down by 0.4% from end-2016while increasing by 13.2% from end-january2016 to reachus$ 3.8 billion at end-january2017. As such, net public debt which excludes the public sector deposits at the Central Bank and commercial banks from overall debt figures, decreased by 0.1% from end-2016while it rose by 5.8% from end- January2016to reach a total of US$ 65.3 billion at end-january2017. Net domestic debt amounted to US$ 37.1billion at end-january2017, down by 0.5% from end-2016while up by 7.3% from end-january2016. _ VALUE OF KAFALAT GUARANTEES DOWN BY 32.9% YEAR-ON-YEAR IN THE FIRST TWO MONTHS OF 2017 Figures released by the Kafalat Corporation indicate that loans extended to small and medium sized companies under the guarantee of Kafalat totaled US$ 11.7 million in the first two months of 2017, down by 32.9% year-on-year from US$ 17.4 million registered during the same period of 2016. Meanwhile, the aggregate number of guarantees amounted to 96 in the first two months of 2017, falling from 117 guarantees given in the first two months of 2016. Agriculture and industry captured again the lion s share when it comes to the number of extended guarantees in the first two months of 2017, with 45 (or 46.9% of the total number of guarantees) and 26guarantees (27.1% of the total), respectively. Tourism came in next with 17 guarantees (17.7%), followed by specialized technologies with 5 guarantees (5.2%) and handicrafts with 3 guarantees (3.1%). As for the distribution of guarantees by area, Mount Lebanon accounted for the biggest share of given guarantees with 38 guarantees (39.6%), followed by Bekaa with 23 guarantees (24.0%), the South with 14 guarantees (14.6%),Nabattiyehwith 8 guarantees (8.3%), Beirut with 7 guarantees (7.3%) and the North with 6 guarantees (6.3%). BREAKDOWN OF KAFALAT GUARANTEES Sources: Kafalat, Bank Audi's Group Research Department 4

SURVEYS NEW EUROBOND ISSUE TO BE WELL RECEIVED BY BOTH ONSHORE AND INTERNATIONAL INVESTORS, AS PER STANDARD CHARTERED Lebanon s sovereign curve currently trades wider than the EMBI average, offering an 85 bps pick-up over JP Morgan Emerging Markets Bond Index (EMBI) spreads, versus trading flat to tighter until end-2015, according to Standard Chartered s Credit Alert report. The complex had lagged the EMBI on slowing private-capital inflows as geopolitical tensions led to slowing remittances and tourism revenues. This affected the liquidity of the domestic banks, which is Lebanon s main funding source and large holders of LEBAN Eurobonds. Meanwhile, is worth noting that Banque Du Liban (BDL) conducted a financial swap operation to rebuild FX reserves, which impacted foreign-currency liquidity in the banking sector and led to a rise in the supply of LEBAN Eurobonds by US$ 2billion, as per Standard Chartered. The LEBAN complex s technicals are improving, according to Standard Chartered. Private-capital inflows have picked up along with the revival of private-sector confidence in Lebanon on political progress with the election of a President in October and the subsequent rapid formation of a coalition government. Domestic banks have been offering higher rates on foreign-currency deposits since mid- 2016. Consequently, foreign-currency liquidity (deposits less loans) in the domestic banking sector rose LBP 9.8 trillion in H2-2016, versus a rise of only LBP 1.3 trillion in H1-2016, as per Standard Chartered s estimates. LEBAN-complex spreads correlate with changes in banks foreign-currency liquidity, as per the report. According to the report, EMBI-benchmark investors previously had a small underweight position in Lebanon as of end-december, which acts as a positive technical. However, some investors may now look to cover their underweight positions, as LEBAN complex spreads are wider than the EMBI average and its spread movement is less correlated with broader emerging markets. While Lebanon would also be looking to issue US$ 1.5-2billon worth of bonds in March, Standard Chartered expects the total net issuance size to be small given the upcoming redemption of the US$ 1.5billion LEBAN 9% 2017. Accordingly, Standard Chartered expects the issuance to be well received by both onshore and international investors and do not see it as a technical negative. The report added that Lebanon s fiscal deficit in 2017 is expected to remain large, at 8% of GDP, on delays in tax reform implementation, slow economic growth and rising oil prices which could keep the subsidy burden elevated. The fiscal deficit widened 31% y/y to LBP 2.6 billion in 8M-2016 despite subsidy transfers to Electricite du Liban (EDL) being lower by LBP 400 million. Interest payments-to-revenue was also high at 44% during the period; interest payments may remain elevated given the rise in secondary-market yields in both Lebanon s local and US$ markets in 2016. The wide fiscal deficit level is a cause for concern even though Lebanon s funding sources are stable. Moody s estimates the country s debt-stabilising fiscal deficit at 4.3%, which implies that its debt-to-gdp ratio of 132% is likely to continue rising. According to the report, despite structural weakness on the fiscal and external fronts, the sovereign s financing gap is covered. To finance the fiscal deficit, the government has relied heavily on the banking system (assets worth c.390% of GDP), which holds over 70% of total government debt. The non-resident share of banking-sector deposits, both Lebanese pound (LBP) and foreign-currency deposit, is large at 20-25% due to large remittance inflows. As a result, domestic banks are also large holders of the sovereign s Eurobonds. The government s external debt is thus much lower than its foreign-currency debt. 5

GOVERNMENT OF LEBANON RATING AFFIRMED AT B2/NEGATIVE, AS PER MOODY S Lebanon's B2 government bond rating is based on Moody s sovereign methodology indicated scores of low economic strength, low institutional strength, very low (-) fiscal strength, and moderate (+) event risk. These scores lead to a three-notch rating range of B2- Caa1. Lebanon's B2 government bond rating balances the country's very high debt burden, large twin deficits, and challenging politicalenvironment with a solid level of domestic liquidity and persistent resilience to destabilizing shocks. According to the report, Lebanon's low economic strength is based on moderate wealth and a resilient economic framework but also reflects the country's small size and weak competitiveness. Lebanon's large services industry and remittances have generated a moderate per capita GDP at purchasing power parity of US$18,500 in 2016, in line with higher-rated sovereigns. However, since 2011 the lack of investment in infrastructure and the absence of economic reforms have weakened the country's competitiveness, and would likely prevent Lebanon from returning to previously high real GDP growth, even if political risks abate. Having recorded high GDP growth between 2007 and 2010, Lebanon's growth has since slowed to just 1% to 2% annually, a rate that is low among rating peers. Moody s estimate that the country's medium-term growth will hover around 2.5% per annum, a moderate level, although growth has proven resilient to destabilizing shocks, remaining positive in recent years. Economic activity could pick up to 2.8% this year from 1.7% in 2016 because of renewed political stability. Lebanon's low institutional strength reflects an unpredictable governance framework, which balances very weak fiscal policy effectiveness with a robust monetary policy system and the government's strong willingness to service debt. Political polarization has considerably weakened policy effectiveness and despite recent improvements, consensus on economic and fiscal reforms may remain elusive. Although a new president and cabinet are in place, the political outlook is clouded by parliamentary elections, with the parliament having extended its tenure until at least May 2017, as per the report. A prolonged paralysis of decision-making bodies has led to a deterioration of infrastructure, as reflected by the build-up of waste in the capital city of Beirut in 2015-16. Between 2016 and 2018, Moody s expects the government debt burden to increase by another 8.6 percentage points of GDP.Lebanon's medium (+) score for susceptibility to event risk balances the country's high exposure to destabilizing political and geopolitical events with the limited impact of those risks on growth, banking sector and exchange rate stability. While political and banking sector risk scores are set at medium (+), external vulnerability and government liquidity risk scores are set at medium and low (+) to reflect the cushion provided by large reserves and ample domestic liquidity, respectively. According to the report, Lebanese commercial banks, the government's primary creditors, remain willing and able to purchase and roll over government debt given their significant deposit-funded resources, alleviating government liquidity risks. The domestic banking system benefits from large and stable deposit inflows from the Lebanese in Lebanon and abroad. Despite the country's political instability, investor confidence hasremained solid, with private sector deposits increasing 7.4% year-on-year as of December 2016 and deposit dollarization stable. 6

CORPORATE NEWS FRANSABANK S NET PROFITS RISE BY 11.8% TO US$ 200.8 MILLION IN 2016 Fransabank posted net profits of US$ 200.8 million in 2016, up from US$ 179.6 million in 2015, as per Bankdata Financial Services. Net interest income amounted to US$ 367.7 million in 2016, up by 0.8% from US$ 364.9 million recorded in 2015. Net fee and commission income increased from US$ 56.1 million in 2015 to US$ 63.9million in 2016. Total operating income edged up by 0.8% to attain US$ 523.9 million in 2016, compared to US$ 519.6million in 2015. Total operating expenses increased by 1.7% to US$ 272.0 million in 2016, of which staff expenses reaching US$ 172.9 million, 2.6% higher than those reported in 2015, and administrative and other operating expenses reaching US$ 78.7 million, 0.2% lower than those of 2015. The cost-toincome ratio slightly inched up from 50.4% in 2015 to 50.8% last year. Fransabank s assets totaled US$ 20.9 billion at end-2016, up by 4.4% from US$ 20.0 billion at end-2015. Net loans and advances stood at US$ 6.5 billion at end-2016, up by 3.9% from end-2015. Gross doubtful loans to gross loans ratio reached 14.7% at end-2016, against 14.4% at end-2015, while loan loss reserves on doubtful loans to doubtful loans ratio remained unchanged at 74.3%. Customers deposits amounted to US$ 17.0 billion at end-2016, up from US$ 16.3 billion at end-2015. Shareholders equity totaled US$ 2.1 billion at end-2016, up from US$ 2.0 billion at end-2015. FRANSABANK'S NET PROFITS (US$ MILLION) Sources: Bankdata Financial Services, Bank Audi's Group Research Department 7

_ NET PROFITS OF SGBL UP BY AN ANNUAL 18.0% TO US$ 200.7 MILLION IN 2016 Société Générale de Banque au Liban (SGBL) posted net profits of US$ 200.7 million in 2016, up by 18.0% from US$ 170.1 million reported in the previous year, as per Bankdata Financial Services. The bank s net interest income attained US$ 276.7 million in 2016, up by1.2% from US$ 273.5 million in 2015. Net fee and commission income rose by 34.8% year-on-year to stand at US$ 56.5 million in 2016. It is worth noting that the net gain on financial assets nearly quantapled to stand at US$ 372.4 million in 2016. Total operating income rose by a yearly 77.3% from US$ 404.7 million in 2015 to US$ 717.5 million in 2016. This was accompanied by a 73.3% yearly growth in total operating expenses, which amounted to US$ 309.4 million in 2016, up from US$ 178.6 million in 2015. Among the latter category, staff expenses stood at US$ 89.2 million in 2016, up by a yearly 7.5% from its value in 2015 and administrative and other operating expenses rose by a yearly 18.4% to stand at US$ 102.3 million in 2016. The bank s total assets amounted to US$ 19.1 billion at end-2016, up by 15.5% from US$ 16.5 billion at end-2015. Deposits from customers stood at US$ 14.6 billion at end-2016, up by 15.4% from end-2015. Loans to customers registered US$ 4.5 billion at end-2016, up by a yearly 6.7% from end-2015. SGBL'S MAJOR BALANCE SHEET AGGREGATES (US$ BILLION) Sources: Bankdata Financial Services, Bank Audi's Group Research Department 8

CAPITAL MARKETS MONEY MARKET: SOUND WEEKLY EXPANSION IN RESIDENT BANKING DEPOSITS Local currency liquidity remained quite abundant on the money market this week, which left the overnight rate stable at 3.00%. As to Certificates of Deposits, shy subscriptions of LP 28 billion were made in the 60-day category, bringing total subscriptions in the 45-day and 60-day categories to LP 878 billion since the beginning of the year 2017. In parallel, the latest monetary statistics released by the Central Bank of Lebanon showed that the resident banking deposits extended their upward trajectory for the fourth consecutive week, rising by LP 274 billion during the week ending 23rd of February 2017, which brought the total increase in deposits to circa LP 2,199 billion during the first two months of 2017, as compared to a retreat of LP 319 billion during the corresponding period of 2016. A closer look at deposits shows that LP deposits increased by LP 162 billion during the week ending 23rd of February 2017, as a result of a LP 155 billion growth in LP time deposits and a LP 7 billion rise in LP demand deposits, and foreign currency deposits grew by LP 112 billion (the equivalent of US$ 74 million). These weekly variations compare to an average weekly increase of LP 25 billion for LP deposits and an average weekly rise of US$ 166 million for foreign currency deposits since the beginning of the year 2017. Within this context, the total money supply in its large sense (M4) expanded by LP 245 billion amid a LP 75 billion growth in Tbs held by the public and a LP 104 billion decrease in money in circulation. On a cumulative basis, money supply in its large sense (M4) expanded by LP 1,889 billion since the beginning of 2017. This is the result of a growth in foreign currency resident deposits of LP 1,865 billion (the equivalent of US$ 1,237 million), an increase in LP resident time deposits of LP 616 billion, a fall in money supply (M1) of LP 715 billion, and a rise in Treasury bills held by the public of LP 123 billion since the beginning of the year 2017. INTEREST RATES Source: Bloomberg TREASURY BILLS MARKET: WEEKLY NOMINAL DEFICIT OF LP 199 BILLION The latest auction s results dated March 9, 2017 showed that the three-month, one-year and five-year categories had an allocation of 51.2%, 18.2% and 11.3% respectively. The auction results for value date 2nd of March 2017 released by the Central Bank of Lebanon showed that total subscriptions amounted to LP 648 billion and were distributed as follows: LP 77 billion in the six-month category, LP 386 billion in the three-year category and LP 185 billion in the seven-year category. These compare to weekly maturities of LP 847 billion, resulting in a weekly nominal deficit of LP 199 billion. 9

TREASURY BILLS Sources: Central Bank of Lebanon, Bloomberg FOREIGN EXCHANGE MARKET: SUSTAINED BALANCED FX ACTIVITY The foreign exchange market continued to see this week some commercial demand for the US dollar that was met by offer. Activity remained balanced in relatively moderate volumes, while commercial banks continued to trade the greenback at a rate hovering between LP 1,514 and LP 1,514.50 (slightly above the upper bound of the Central Bank of Lebanon s intervention bracket). EXCHANGE RATES Source: Bank Audi s Group Research Department _ STOCK MARKET: SLUGGISH BSE ACTIVITY WITH SHY PRICE GAINS WEEK-ON-WEEK Activity remained sluggish on the Beirut Stock Exchange this week. The total trading value was restricted to US$ 2.9 million as compared to US$ 2.4 million in the previous week and an average weekly trading value of US$ 7.7 million since the beginning of the year 2017. The banking shares captured 80.58% of activity, followed by Solidere shares with 19.40% and the industrial shares with 0.02%. The average daily trading value rose to US$ 480 thousand last week to US$ 574 thousand this week, which resulted in a 19.7% increase in the trading volume index to reach 24.14. As far as prices are concerned, the BSE price index increased slightly by 0.5% this week to close at 108.33. Five out of 12 traded stocks posted price rises, while four stocks saw price declines and three stocks registered no price change week-on-week. For instance, Solidere A share price retreated by 0.3% to close at US$ 9.10. Solidere B share price edged up by 0.8% to US$ 9.07. As to banking stocks, Bank Audi s listed share price rose by 0.7% to close at US$ 6.80. Bank Audi s GDR price closed 1.4% higher at US$ 10

6.75. BLOM s listed share price went up by 1.7% to US$ 11.90. BLOM s GDR price decreased by 0.8% to close at US$ 12.65. Byblos Bank s listed share price rose by 1.2% to close at US$ 1.74. Amongst industrials, Holcim Liban s share price shed 11.8% to close at US$ 11.11. The BSE s weekly performance compared to a 1.4% fall in broader Arabian markets share prices (as per S&P Pan-Arab Composite Index) and a 0.5% retreat in broader emerging markets share prices (as per S&P Emerging Frontier Super Composite Index). AUDI INDICES FOR BSE Sources: Beirut Stock Exchange, Bank Audi s Group Research Department BOND MARKET: EXTENDED WEEKLY CONTRACTIONS IN SPREADS Lebanese Eurobonds continued to see downward price movements this week, mainly tracking US Treasuries move amid fueled bets that the US Federal Reserve would raise its benchmark interest rates mid-march 2017 and after the ECB said there was no longer a sense of urgency to take further action on monetary stimulus and that policymakers do not anticipate that it will be necessary to lower rates further. In addition, some international market players offered their papers on the Eurobond market, as they opted to leave room for the new issue coming underway. Given this sell-off mood, foreign institutional investors were better sellers of longer-term papers maturing between November 2026 and November 2035 over this week. Within this context, the weighted average yield rose by 3 basis points to 5.38%, while the weighted average spread contracted by 7 basis points to reach 340 basis points amid higher increases in US Treasuries yields. For instance, the five-year US Treasuries yield increased from 2.03% last week to 2.13% this week. As to the cost of insuring debt, Lebanon s five-year CDS spread hovered between 410 basis points and 430 basis points this week as compared to 420-450 basis points last week. EUROBONDS INDICATORS Source: Bank Audi s Group Research Department 11

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 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. 12