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20 February 2020

Lebanon to probe sale of Eurobonds bought by Ashmore

The public prosecutor has asked Banque du Liban’s Special Investigation Commission for the data

Local creditors sold at least $500 million of the March 2020 notes to Ashmore/Bloomberg

by Kudakwashe Muzoriwa

Lebanon is investigating the sale of Eurobonds by local banks to foreign investors including Ashmore Group.

The government has requested information regarding the trades, including the names of the institutions and lenders that sold the bonds.

Lebanon is still deciding whether to repay a $1.2 billion bond maturing on 9 March 2020 as it battles its worst economic crisis in decades. The price plunged almost 20 cents this week to a record low of 54 cents on the dollar, with the annualised yield surging past 1,000 per cent.

Local banks wanted to sell the March 2020 debt after the central bank proposed swapping domestic holders into longer-dated notes and repaying foreigners.

The investigation will look into claims that the sales to foreigners undermined Lebanon’s financial position and made any potential restructuring more difficult.

The finance ministry later pushed back against the swap plan after rating agencies said they might view it as a distressed exchange and downgrade Lebanon. Fitch said that Lebanon may still be considering the idea.

Local creditors sold at least $500 million of the March 2020 notes to Ashmore. The London-based firm, which specialises in emerging markets and manages almost $100 billion of assets, held around 25 per cent of the bonds at the end of 2019.

Last month, Riad Salameh, BdL Governor told Lebanese bankers that a foreign fund was interested in buying the March 2020 bonds if the country proceeded with the swap.


RELATED STORIES: Lebanon Eurobonds Ashmore Banque du Liban





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