Beirut, Lebanon – Lebanese Prime Minister Hassan Diab announced on Saturday that Beirut will not repay a $1.2bn Eurobond due next week and will instead seek to restructure its massive debt as the country’s dollar reserves dwindle amid an acute financial crisis.
In a televised address to the nation, Diab said the “difficult decision” to default for the first time in Lebanon’s history had been made in order to “secure the basic needs for people”.
Lebanon is in the throes of an economic meltdown rooted in corruption, government mismanagement, a decrepit power sector that bleeds billions from state coffers and the civil war next door in Syria.
As of Friday, the 10-year yield on Lebanon’s sovereign debt soared to 30%. And 5Y CDS soared to 18,400.
On top of the Lebanon freezes their Eurobond Payment.
(Bloomberg) — Lebanon is about to enter the crucial first phase of talks aimed at renegotiating its $30 billion in Eurobonds after saying at the weekend it won’t pay dollar debt coming due on Monday.
The government’s declaration on Saturday that it won’t repay the $1.2 billion Eurobond puts the country on course for the first default in its history as it copes with dwindling foreign-currency reserves and inflation running in double digits. Talks will be complicated by high foreign ownership of some of the bonds and political divisions that have left the economy on the ropes.
Is this what Texans call “Cedar Fever”?