Lebanon: Government to tap local market in issuing $5 billion in new bonds
The Finance Ministry is expected to tap the local market for financing soon to issue $5 billion worth of Eurobonds and treasury bills to cover the public debt in 2012. The ministry, in collaboration with the Central Bank, intends to announce the names of the banks which will co-manage the new issue.
The $5 billion bonds will be split into two categories: the first for $2 billion in Eurobonds, and the second $3 billion batch to replace the outstanding bonds both in Lebanese pounds and foreign currencies. Lebanon has been aggressively seeking new funds through the issuance of bonds, taking advantage of a gradual drop in interest rates in the international markets.
Finance Minister Mohammad Safadi has even suggested that the government issue bonds on the international market since the interest on foreign bonds is far lower than on bonds offered in the local market.
The Finance Ministry issued $1.2 billion in Eurobonds on Aug. 2 in two groups: the first $500 million due in November 2016 at an interest rate of 4.75 percent, the lowest interest rate achieved by Lebanon on the issuance of foreign currency since 1994; and the second, $700 million with an interest rate of 6.2 percent, through the reopening of a Eurobond due in October 2022 at an interest rate of 6.1 percent. Demand for the issue was four times the value of the bonds on offer, with foreign investors obtaining 21 percent of the total issued.
But Lebanese banks, which hold 51.5 percent of the government’s debt, sent a clear message to the Finance Ministry that they have no intention of lending the state more money as this would increase their risk exposure. Bankers said that they are willing to roll over the maturing Eurobonds and bonds to finance the needs of the state. Banks want foreign debt below 40 percent of total debt.
- Understanding the ripple effect: 8 reasons the US economy has slowed down in Q1 of 2015
- Can Bahrian emerge from the oil price plunge 'stronger than ever'?
- Egyptian stocks plummet as Yemen confict deepens
- UAE sweetens flotation regulations to attract more investment
- Replacing Switzerland? Why Lebanon isn't keeping its banking secrecy a secret
- Bigger bonds, higher yields: Lebanon's government to issue ten-year bonds
- State Of Israel's New US$1.5 Billion, 10-Year Global Bond Issue Assigned 'A' Rating
- IFIS report reveals continued rapid growth in Islamic Bond issues. 13.4 billion dollars issued in the first half of 2006 alone, surpassing entire 200
- Gaza and Syria cause headache for Lebanon's Eurobond sale