$1.66 billion in T-Bills

Lira notes draw high subscription by banks

The turnout was heavy for newly issued special Treasury Bills (T-Bills) in Lebanese liras, with a ten- to 12-year maturity. The Ministry of Finance said subscription by local banks reached around $1.66 billion.

According to a statement by the Ministry, the sum exceeded the goal of the initial public offering (IPO) by almost 50 percent. George Aouad, advisor to the Chairman at First National Bank, said: “The level of subscription exceeded expectations. This shows that banks are still interested in funding the public sector.”

“The Central Bank and Lebanese commercial banks are the main subscribers of T-bills since the appetite of foreign investors for such bonds has reduced considerably in recent years.” said Joe Sarrouh, Consultant at Fransabank.

Subscription to 12-year T-Bills was much higher than for those with a ten-year maturity. Sarrouh said the interest on these T-Bills was high at around eight percent for 10-year bills.

Aouad said it is not possible to make an accurate prediction about banks’ subscription to any issuance of bonds in US dollars. “The Association of Banks is right in adopting a conservative attitude towards State lending. Bank loans to the government are equal to almost 50 percent of their customer deposits; they do not wish to risk these funds.”

“The ministry needs to issue Eurobonds but instability is not encouraging on the short term. We hope that the situation in Syria – especially when it comes to the chemical weapons issue – will be resolved so the country’s investment environment can get back on its feet,” said Sarrouh.