Lebanon Told to Hold Off on Eurobond Swap After Default Warning

Lebanon’s government has been warned by rating companies that a proposed Eurobond swap with local banks would be considered a “selective default,” a person familiar with the matter said, Bloomberg News reported. The Finance Ministry sent a letter to the central bank Wednesday asking it to hold off on the deal, according to the person, who asked not be identified because the information isn’t public. Based on their communication with the ministry, rating companies could declare Lebanon to be in breach of its obligations “because it is considered a distressed exchange.” Given the threat to the sovereign rating, the ministry has asked the central bank not to pursue the transaction until the government decides on a financing plan for the Eurobonds maturing in 2020, according to the person. Read more