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CHAMPION OF THE DAY
Eurobond swap - UPDATE
Debt restructuring will also ensure
repayment to foreign bond holders
The Ministry of Finance (MoF) has asked the Central Bank (BDL) to postpone a proposed swap of Eurobonds due in 2020 after ratings agencies warned it could constitute a selective default
Sovereign debt will be restructured in a way that hurts neither the economy nor depositors, and foreign holders will be repaid, Chairman of the Association of Banks, Salim Sfeir, told Reuters news agency.
Eurobonds of $2.5 billion are set to mature this year. There are $1.2 billion maturing in March, $700 million in April, and another $600 million tranche maturing in June 2020. Lebanese investors hold the bulk of the debt.
Foreigners hold 30 percent of the Eurobonds. “Of course foreign holders will be repaid,” Sfeir said.
A proposal by the Central Bank for local banks to swap their holdings for longer-dated notes, will take place. “Such swaps are common practice,” he said.
“What is being done now is not against the people. Their money is secured and, let me add, the pressure is not from large depositors,” he said.
“Probably the debt is going to be restructured in one way or another but without affecting the deposits of the people and they are currently working to assure that,” Sfeir said. “It would give more oxygen in order to stimulate our economy,” he said.
Sfeir said the restructuring would be the responsibility of the government, but interest rates would go down and maturities would be extended.
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Jan 14, 2020
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