Lebanon announces $1 billion Eurobond issue
The Lebanese Finance Ministry announced earlier this week the issuance of a five-year sovereign Eurobond, maturing in 2006, which is to replace the $500-million Eurobond that matures on April 23, 2001. Due to high demand, the new issue’s value will rise from the previous value of $600 million to $1 billion. The bond will carry a coupon rate of 9.875 percent, equivalent to 536 basis points over corresponding US treasuries.
BNP Paribas, ABN AMRO, and Schroder Salomon Smith Barney are to jointly manage the issue. The transaction represents the largest single issue, considering that 15-20 percent of the issue was placed internationally. Lebanon issues hard-currency eurobonds as a means of managing its $23.85 billion debt— a figure corresponding to approximately 145 percent of the country’s GDP.
The Lebanese government is progressively shifting towards foreign financing, due to lower borrowing rates for longer periods of time. The country’s foreign currency borrowing presently stands at 30.6 percent of total net public debt.
An additional 15-year $300 million Eurobond issue is also to be launched, making it the first sovereign bond issue with such longest-term maturity. The Finance Minister stated the mandate was offered to Credit Suisse First Boston, which will also underwrite it. The Eurobond will be offered to non-Lebanese investors abroad, a move that roves the government’s genuine intentions of restructuring the Lebanese economy. He added that the issue does not constitute a new debt, but rather it is a swap of debt in Lebanese pounds with one denominated in foreign currency. — (Albawaba-MEBG)
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