$2 billion in Eurobonds
for sale by the Central Bank

To be issued within one year

The Central Bank (BDL) plans to sell Eurobonds worth up to $2 billion over the next 12 months, according to Riad Salameh, its governor. Buyers would mainly be local banks.

The bonds, denominated in US dollars, would be sold in tranches ranging between $500 million and $1 billion.

Salameh said that Lebanese Eurobonds are undervalued and that they generate high yield on the secondary market. He said that the government does not intend to sell Eurobonds directly on the market but it issues them specifically for BDL.

The bonds are part of a swap operation between BDL and the Ministry of Finance (MoF) valued at around $6 billion. The swap, taking place before the Eurobond issuance, is expected to be completed this month. It consists of low-interest treasury bills in lira provided by BDL to MoF against the dollar Eurobonds. The remaining balance, after selling the $2 billion Eurobonds, will be kept on BDL’s books for the coming years.

According to the 2018 budget law, the government is authorized by Parliament to issue up to $6 billion in bonds to restructure the public debt.

Salameh said that unlike the financial engineering operations of 2016, the current swap does not necessitate offering incentives to local banks as the government’s position is improving and the pressure from the unrest in Syria is easing.

The swap operations aim to strengthen BDL’s foreign currency assets and maintain the stability of the lira.