Eurobonds below 10 cents
since parliamentary elections

Prices similar to debt of sanctioned Venezuela

Eurobonds issued by the Lebanese government dipped below ten cents in the past two weeks for the first time since the default on the sovereign debt in March 2020. The bonds are now trading at about 9.5 percent of their official redemption value, similar to Venezuelan debt. Venezuela, an oil-rich country, is under tough U.S. sanctions.

A $3 billion staff-level agreement reached a few weeks ago with the International Monetary Fund (IMF) did little to restore confidence and trigger a rebound in Eurobond prices. The agreement was conditional on a large number of difficult-to-pass governmental and parliamentary measures. These include structural reforms in the fiscal, financial, and monetary sectors.

A number of foreign funds including Amundi, Ashmore, BlackRock, BlueBay, Fidelity and T-Rowe Price, as well as a group of smaller hedge funds, hold a blocking stake of more than 25 percent in 40 percent of Lebanon’s various bond series. They had acquired most of their holdings in the Lebanese securities, estimated at $11 billion, at steep discounts, since the beginning of the crisis, starting at 70 percent from redemption, all the way down to 30 percent. The sellers were local banks starved for fresh dollars. This leaves around $19 billion with the Central Bank ($5 billion) and local banks.