Eurobonds nearing $24
setting new record high

JP Morgan and Morgan Stanley

expect price to keep going up

Eurobond prices traded for $23.6 to $23.7 yesterday, up from $19.5-$19.7 a month ago, and $13.4-$13.7 at the beginning of the year. It is the highest level since its crash after the government defaulted in 2020.

The rally is being fueled by renewed optimism among international investors and supportive assessments from major investment banks. Market participants point to both the government’s plan to assert exclusive state control over weapons and ongoing reform efforts as key factors driving sentiment. Elevated trading activity continues, with active two-way flows that signal a dynamic market environment combining fresh buying interest with profit-taking.

Financial companies with a direct stake in the bonds are blowing their horn. JP Morgan said current Eurobond valuations remain attractive for trading into the fourth quarter of 2025, projecting prices to hover around 23-24 cents by year-end. Morgan Stanley offered a more bullish outlook, forecasting prices in the $30-$35 range by December 2026. Both banks expect restructuring talks to intensify in the coming years. Morgan Stanley anticipates negotiations will advance by mid-2026. JP Morgan noted that eventual restructuring terms are likely to include a 65 percent haircut on principal and accrued interest, implying a recovery rate of about 35 percent.

The prospect of an International Monetary Fund (IMF) agreement is also lending support to the market. JP Morgan said the government’s reform drive could bring it closer to an IMF deal in the coming months. Such an agreement would unlock international assistance and pave the way for a restructuring of Lebanon’s defaulted external debt next year.

Local research has echoed this view. In a recent report, Blominvest Bank highlighted that progress on IMF prerequisites has played a crucial role in the recent price gains. Two of the three key reforms, the banking secrecy law and the bank restructuring law, have been passed. The financial gap law remains pending. It said that enacting this final measure would be decisive for bondholders. “It would pave the way for a formal recovery framework, allowing bondholders to realistically recover their investments after accounting for haircuts, rescheduling terms, and other restructuring parameters,” it said.