Eurobonds rally
to five-year high

JP Morgan: Discussion on debt restructuring might still be far away

Lebanon’s dollar-denominated bonds (Eurobonds) jumped to 18.56 cents (or higher as of this writing), the highest level since March 2020, when Lebanon defaulted on its debt amid a severe financial crisis.

The increase represent a 7.5 percent over the last closing. Since Hezbollah and Israel war started in September of last year, then agreed to a ceasefire in November, Lebanon’s bonds have more than doubled in value. The latest bond rally continues a remarkable recovery from deeply distressed levels, where they had traded between six and ten cents for much of the past three years.

Today's rise is a reaction to the formation of a new government. Investors are hoping it will pave the way for structural and financial reforms and much-needed reconstruction funds after the recent war between Hezbollah and Israel. The new government said upon its formation on Saturday that it would prioritize financial reforms, reconstruction, and the implementation of UN resolution 1701.

Progress on restructuring for the Eurobonds might still be some time off. “Discussion on debt restructuring might still be far away, moreover as the rebuilding and reconstruction exercise will need to be the priority,” JPMorgan analysts said in a note to clients.