Lebanon has a lot more than just maturing Eurobonds to worry about. The minister explained that applying a haircut on the Eurobonds depends on the negotiations with the bond holders. Some estimates say a 70 percent haircut is needed, Reuters reported. Crisis-hit Lebanon’s government has to decide whether it should restructure or pay its $2.5 billion Eurobonds, including a $1.2 billion Eurobond maturing in March, $600 million maturing in April, and $700 million in June. The central bank (Banque du Liban, BdL) can always print enough liras to pay offer the former, but it is unable to print dollars to pay the latter. Diab explained that debt restructuring is part of a wider economic rescue plan, that seeks to cut state spending and save more than $350 million annually, including by downsizing the banking sector. Explainer: With no self-pardon in hand, could Trump face legal issues as a citizen? Of Lebanon’s $30 billion worth of international bonds, two-thirds are held by local banks and the central bank, while about one-third is held by foreign investors. The state issues the Eurobonds and not BDL,” the source explained. Key Takeaways. The section of the bond documents that has “waiver” in the title does not even explicitly discuss the procedures for granting waivers. Ghobril explained that defaulting on payment of Eurobonds must happen within a package by the International Monetary Fund (IMF). Diab said that Lebanon will not repay the $1.2 billion Eurobond that was due today, and will seek to restructure its debt as the country's dollar reser A eurobond is a domestically issued bond held in a non-native currency. “The government has some options concerning the Eurobonds for the timbering. Eurobonds explained (explainity® explainer video) - YouTube It added that Lebanon’s long-term Eurobonds were the only undervalued bonds among 20 B-rated sovereigns with these maturities. Figures released by the Ministry of Finance show that Lebanon’s gross public debt reached $85.32B during the first month of 2019, up from $80.39B in January 2019. Ghobril explained that defaulting on payment of Eurobonds must happen within a package by the International Monetary Fund (IMF). Lebanon said Saturday it would default on its Eurobond debt for the first time and seek out restructuring agreements due to a spiralling financial crisis that has hit foreign currency reserves. This dynamic is comparable to an individual’s credit score affecting how likely it is for a bank to grant them a loan and for a country, it is a situation that can take decades to recover from. The state issues the Eurobonds and not BDL,” the source explained. So far, however, authorities have strongly denied rumors that a depositor haircut is on the table. Lebanon may have saved itself the debacle of going into a kind of default-lite this week, but it’s hard to see how it’s going to wiggle out of a real default. In fact, the language is jumbled. Lebanon eurobond crisis: Default, haircut, restructuring, refinancing explained, Lebanon PM Diab says government can’t pay its debt, suspends March bond payment, Shortages of food and medical supplies loom over Lebanon protests, Lebanon’s Prime Minister Hassan Diab leaves after giving an address where he informed the country would not pay its Eurobond on March 7, 2020. Lebanon said Saturday it would default on its Eurobond debt for the first time and seek out restructuring agreements due to a spiralling financial crisis that has hit foreign currency reserves. A eurobond is an international bond that is denominated in a currency not native to the country where it is issued. Eurobonds can be purchased in the same way as most other bonds through global stock exchanges. Why doesn’t the world sympathize with Tehran and Damascus? To stave off some of the pain, Lebanon will need to make some tough choices to regain the confidence of its people and the markets. It added that Lebanon’s long-term Eurobonds were the only undervalued bonds among 20 B-rated sovereigns with these maturities. Treasury bills also make up a significant portion of the overall assets of the banks, meaning that in the event of a default, the value of these assets would decrease. Lebanon's finance ministry on Monday said it will "discontinue" payments on all dollar-denominated Eurobonds due in the next 15 years to safeguard dwindling foreign currency reserves. Lebanese banks hold around $14.5 billion of the sovereign Eurobonds, the Central Bank holds $5.5 billion while the rest are held by foreign investment funds. A U.S.-dollar denominated bond, or a bond of another currency, that is issued and traded outside of the country whose currency is used. “Moody’s recent report admitted that Lebanon has never defaulted on the payment of its debts. (File photo: Dalati Nohra/Handout/Reuters), Last Update: Wednesday, 20 May 2020 KSA 10:05 - GMT 07:05, Kuwait’s emir appoints Sabah al-Khalid as new PM, American charged with using $2 million of coronavirus aid for luxury cars, homes, Coronavirus: Indonesia deports Russian social media star after party, Coronavirus: Multiple daily COVID-19 deaths at Lebanon hospitals becomes new normal, Explainer: Everything you need to know about Russia’s Sputnik V COVID-19 vaccine, Swiss crematorium swamped by coronavirus deaths, tries to enable peaceful goodbyes. Defaulting on debt in the short term will reduce the amount that the country will need to pay back – more on this later – but this can have disastrous consequences in the long term. An example of refinancing was used above as a form of restructuring– when a loan with a high interest rate is paid off with a lower interest rate loan, leaving the debtor with lower payments. Parliament Speaker Nabih Berri rejected the payment of maturities on Lebanon’s foreign-currency debt, MP Ali Bazzi said Wednesday. Economy Minister Raoul Nehme, a former banker, explained on MTV that the discussions with creditors, and therefore banks, were not expected until after the plan was finalized in the context of negotiations with the IMF. Jan 20, 2021 Lebanon News Lebanon's virus death toll over 2,000 after another daily record Jan 21, 2021 Lebanon News Cabinet breakthrough hinges on ceasing obstruction: Future Jan 21, 2021 Lebanon News Lebanon needs to be wary in COVID-19 vaccine selection Lebanon’s debt is among the largest in the world. in Lebanon to be severe; economies which experience debt, currency, and banking crises simultaneously contract by about 8% before they recover. “Lebanon’s extra long-term Eurobonds, along with those of Argentina (48 bps), were the only undervalued bonds among 10 B-rated sovereigns,” the report said. "Paying $ 4.8 billion will most definitely be a new consolation prize for banks and large depositors, but it will deprive the Lebanese economy and the Lebanese in general from purchasing the most basic materials that the country needs including food, medicine, fuel, and other raw materials for industry and agriculture," the statement explained. He explained: “Last March, the government decided to suspend the payment of international debt bonds (Eurobonds), which required us to prepare a comprehensive financial plan that would serve as a platform for negotiating with creditors, and to submit it to the IMF, which responded to the government’s request for technical assistance at the time.” In the absence of the corona virus outbreak, it was only a matter of time before USD withdrawals ceased, as the existing stock is dry & the exchange rate would have continued depreciating (as I & others explained previously). Lebanese banks hold around $14.5 billion of the sovereign Eurobonds, the Central Bank holds $5.5 billion while the rest are held by foreign investment funds. However, given the country’s economic and political crisis, authorities would need to offer a high interest rate to offset risk for investors, causing greater problems in the future and calling into question whether the loan could ever be repaid. Why doesn’t the world sympathize with Tehran and Damascus? Lebanon is passing through an unprecedented economic and financial crisis unprecedented since its 1975-90 civil war. 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