The Ministry has mandated two local banks, Blom Bank and Fransabank and an international bank, BNP Paribas to manage the sale and market the Eurobonds. 

Officials at the Ministry of Finance declined to disclose additional information on the issue, saying “this is illegal.” But sources said that the new issue will be divided into two tranches; the first matures in seven to eight years and has an interest rate of 6.5 and 6.75 percent while the other matures in 15 years and has an interest rate of 7 to 7.25 percent.

Subscription to the new issue is expected to close in a short period of time as the upcoming issue will cover outstanding debt that matures on March 5.

The three assigned banks will have a relatively short time to market the new Eurobonds. They will initially focus on marketing the issue internally to local investors, dealers, and banks.

Economist, Marwan Iskandar said that selling Eurobonds is currently the only solution for the government to refinance the debt. “There is debt maturing in a short period of time, and the government has to tap international and local investors to re-finance it,” he said.

Iskandar said that around $10 billion of government debt will mature in 2010, expecting other Eurobond issues this year.

Iskandar expected the new issue to attract an overwhelming interest from both, local and international banks. “Local banks have excess liquidity, and they want to invest their money somewhere,” he said.The government also wants a good share of participation from international banks, Iskandar said.

Elie Yachoui, another Economist, drew a bleak picture for the issue and the government’s fiscal performance. “By issuing new Eurobonds, the government is indicating that it has no intention to adopt new reform policies and that its only policy is borrowing more money,” he said.

Yachoui said, that in order to reduce the growing public debt, “the government should control its capital expenditures and adopt new macroeconomic policies that equalize development across all Lebanon and not only in the capital-Beirut.”

Yachoui said that the government “should increase the size of the economy which will reduce the Debt to GDP ratio which is one of the highest worldwide.”

The gross public debt currently stands at $51 billion.