The government appointed JP Morgan and Credit Suisse First Boston as joint lead managers to execute the issuance of a $300 million Eurobond maturing in 2004. This would constitute the first sovereign issue by the new government of Prime Minister Rafik Hariri.
The Eurobond could be extended to $500 million depending on demand. It is expected to have spreads slightly higher than the Republic of Lebanon's current 2003 and 2005 bonds, which stand at 358 and 400 basis points over similar U.S. treasuries. Local banks and Arab and investment funds are expected to buy most of the issue.
Lebanon is the largest issuer of Eurobonds in the Middle East and North Africa region, with Lebanese banks holding the majority of the country’s $4.1 billion in Eurobonds and $18 billion in Lebanese pound treasury bills. Last month, the Central Bank allowed this exposure to rise by increasing from 70 percent to 75 percent the limit of foreign bank assets that could be invested in Eurobonds.
Lebanon’s most recent dollar-denominated issue was a $500 million Eurobond in June. The 5-year bond had a coupon rate of 9.375 percent and a spread of 310 basis points over similar U.S. treasuries. It replaced a $400 million issue of similar value that matured in July.
International rating agency Standard & Poor’s downgraded in September Lebanon’s long-term currency ratings citing the country’s deteriorating public finances. — ( Lebanon Invest )
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