Yields of 100% Push Lebanon’s Bonds Into Venezuela Territory

The political crisis in Lebanon has sent yields on some of its dollar bonds into triple digits. Rates on the government’s $1.2 billion of notes maturing in March next year have climbed 28 percentage points this week to 105%, Bloomberg News reported. They were at 13% five weeks ago, just before the start of protests that led to the resignation of Prime Minister Saad Hariri and exacerbated the nation’s economic woes. Protesters marched to parliament in Beirut on Tuesday, forcing it to suspend a session as the army and riot police tried to disperse them. With Lebanon viewed by many bond traders as a default waiting to happen, cash prices have become more important than yields as they factor in potential recovery rates. That’s inverted the government’s curve and distorted yields at the shorter end. Read more

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