Eurobond yield
hits 1,500 percent

Bond prices plunge

amid restructuring news

The annualized yield on the $1.2 billion Eurobond maturing on March 9 soared to 1,470 percent after the bond’s price hit a record low of 57 cents on Wednesday, according to Bloomberg.

Most of the other Lebanese Eurobonds have fallen to below 35 cents, while the country’s five-year credit-default swaps hover around 5,260 basis points, the highest in the world, according to data compiled by Bloomberg.

“The entire investor focus is on the probability of default, rather than the coupon or accrued income a bond provides,” said Richard Segal, a senior analyst at Manulife Investment Management in London.

The sharp decline in the Eurobond price was triggered by news about debt restructuring and the government’s move to appoint advisors on how to handle its Eurobonds.

Parliament Speaker Nabih Berri said the best solution to the debt crisis is a restructuring.

Standard Chartered Plc., said according to Bloomberg, that Lebanon will most likely have to restructure its debts as it will find it difficult to get external funding.

The government will also invite eight international financial advisors to bid for an advisory role regarding the options to take about the public debt, according to a person familiar with the matter. The source identified the firms as Moelis & Company, Rothschild & Co, Guggenheim Partners, Citibank, Lazard, JP Morgan, PJT Partners and Houlihan Lokey.

Lebanon is also seeking technical assistance from the International Monetary Fund which will send a team between Feb. 20 and 23 to discuss economic issues with government officials.