Lebanon weighs defaulting Eurobond next month

Lebanese police stand outside the Association of Banks in downtown Beirut as the Central Bank’s foreign currency reserves contract. (Reuters)
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Updated 14 February 2020

Lebanon weighs defaulting Eurobond next month

  • New government of Prime Minister Hassan Diab is facing snowballing political and economic crises

BEIRUT: Lebanon’s finance minister said Thursday that its new government is weighing whether to pay or default on its $1.2 billion Eurobond maturing next month, amid an economic crisis that has sparked months of unrest.

Lebanon is facing a deepening liquidity crunch and a soaring public debt. Lebanese banks raised interests rates in a bid to attract foreign investments — but now the influx of foreign currencies has dried up and the Central Bank’s foreign currency reserves are shrinking.

“It is not easy,” Ghazi Wazni told reporters before the new Cabinet’s first meeting. He was speaking after reviewing different options with the government’s financial team.

“This is an important decision for the country, depositors, banks, the economic sector and international institutions,” he said, adding that the search for the “right decision” was ongoing.

The new government, headed by Prime Minister Hassan Diab, was voted into office earlier this week by Parliament and is facing snowballing political and economic crises.

On Wednesday, the International Monetary Fund said that Lebanese authorities had requested its technical advice on macroeconomic issues facing the country.

“IMF stands ready to assist Lebanon,” Gerry Rice, IMF spokesman tweeted Wednesday. “Any decisions on debt are the authorities’, to be made in consultation with their own legal and financial advisers.”

The government is widely expected to form a new committee to deal with the vexing financial crisis, which is the worst since the end of the 1975-1990 Lebanese civil war. But the most immediate question is what to do about a $1.2 billion Eurobond that matures on March 9: default or pay?

Lebanon has never defaulted on its debts. Defaulting could be very costly to the national economy and banking system, which until the recent financial crisis, was one of Lebanon’s most profitable and reputable sectors.


Saudi minister: OPEC+ will take responsible approach to virus

Updated 26 February 2020

Saudi minister: OPEC+ will take responsible approach to virus

  • Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter

RIYADH: Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partner oil-producing nations, the so-called OPEC+ group, would respond responsibly to the spread of the coronavirus.

He also said Saudi Arabia and Russia would continue to engage regarding oil policy.

“Everything serious requires being attended to,” the minister, Prince Abdul Aziz bin Salman, told reporters at an industry conference in Riyadh.

An OPEC+ committee this month recommended the group deepen its output cuts by an additional 600,000 barrels per day.

Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter.

The minister said he was still talking with Moscow and that he was confident of Riyadh’s partnership with the rest of the OPEC+ group.

“We did not run out of ideas, we have not closed our phones. There is always a good way of communicating through conference calls,” he said.

Regarding the coronavirus, which has impacted OPEC member Iran, he said OPEC+ members should not be complacent about the virus but added he was confident every OPEC+ member was a responsible and responsive producer.

The flu-like SARS-CoV-2 virus, which first broke out in China, has now spread to more than 20 countries.

“Of course there is an impact and we are assessing, but we’ll do whatever we can in our next meeting and we’ll address that issue,” UAE Energy Minister Suhail Al-Mazrouei said at the same industry conference.

Saudi Aramco CEO Amin Nasser on Monday said he expected a short-lived impact on oil demand.

“We think this is short term and I am confident that in the second half of the year there is going to be an improvement on the demand side, especially from China,” he said.

Oil climbed on Tuesday as investors sought bargains after crude benchmarks slumped almost 4 percent in the previous session, although concerns about the global spread of the virus capped gains.