Banks ask government
to repay Eurobond on time

Bond will mature in March

The government must settle the Eurobond that will be due in March on time and should immediately start addressing the public debt issue, said the Association of Banks (ABL).

The Eurobond due in March amounts to $1.2 billion.

The remaining time before the maturity of the bond is very short and does not allow for an efficient handling of this issue, the ABL said in a statement.

The bond due in March is part of Eurobonds maturing between March and June this year totaling $2.5 billion. If the coupon payments, amounting to $875 million, are added the total becomes $3.4 billion.

There is a need to reschedule or restructure the public debt through mutual agreement with creditors but this requires time, negotiations, and procedures that are in line with international standards and with the approaches previously used by other countries, according to the ABL statement.

“This [also] requires seeking the assistance of competent international institutions in order to set up credible financial and monetary programs,” the ABL said.

A government source told the Reuters news agency, Lebanon was seeking the advice of the International Monetary Fund (IMF) "on whether to pay the Eurobond maturity amid concerns that any reprofiling of Lebanon's debt should be conducted in an orderly way to avoid damaging the country's banking system."

The source said the government will ask for technical assistance from the IMF to prepare a stabilization plan to help it face the financial and economic crisis. The plan includes how to restructure the public debt, according to the source.

Public debt stood at $91.6 billion at the end of 2019.

The ABL said the country’s defaulting on its foreign debt is a major issue while repaying the Eurobonds on time protects the rights of depositors and maintains Lebanon’s ties with correspondent banks most of which are creditors.

Riad Salameh Governor of the Central Bank said last month that if the State and the banking sector don’t solve in a friendly manner the problem of the Eurobonds that will be due between March and June this year, this will harm the banking sector and the country’s reputation. It will also make securing financing more difficult in an economy that needs to be revived, he said. The banks could voluntarily accept a swap for these Eurobonds it’s up to them, according to Salameh.