Diab to Declare Saturday Lebanon’s Stance on Eurobond Debt

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Prime Minister Hassan Diab will on Saturday announce Lebanon’s official stance on whether or not to pay a $1.2 billion Eurobond debt that matures on March 9, TV networks said.

Diab will declare the position in an address to the nation at 6:30 pm, the networks said.

“So far, no decisive choice has been reached. Each choice is being separately assessed with its legal and financial repercussions,” LBCI TV reported.

“These choice will be discussed in Cabinet on Saturday in the presence of Lebanese and foreign experts,” the TV network added, noting that “the choice of paying the debt has become highly unlikely.”

“The options of orderly and unorderly default are also being studied with their repercussions and there is a third option, which is partial payment and negotiating on the remaining part,” LBCI added.

It said that President Michel Aoun, Speaker Nabih Berri and Diab will hold a meeting prior to the Cabinet session, noting that they might be joined by other officials.

Economists have warned that paying the March 9 Eurobend debt on time would eat away at Lebanon’s plummeting foreign currency reserves, while bankers say a default would damage the country’s reputation with lenders.

Bank of America Merill Lynch in a November report estimated that around 50 percent of Eurobonds were held by local banks, while the central bank had around 11 percent.

Foreign investors owned the remainder, or around 39 percent, it said.

But these figures may have changed, with local media reporting that local banks have recently sold a chunk of their Eurobonds to foreign lenders.

SourceNaharnet

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