North Africa/Middle East

Lebanon’s worst economic crisis in decades is forcing authorities to wade deeper into the kind of fiscal engineering that the International Monetary Fund said risks undermining the central bank’s credibility, Bloomberg News reported. The central bank bought 3 trillion pounds ($2 billion) of Treasury bills from the government at 1 percent, well below market rates, according to a person with knowledge of the matter.
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Lebanon’s caretaker Prime Minister Saad Hariri said he discussed with the heads of the International Monetary Fund and the World Bank a possible plan to ease a deepening financial crisis, Bloomberg News reported. Eurobonds rose after Hariri’s office said on Twitter that he asked the two institutions for technical assistance for the plan, which he said would be implemented by a new government. He also asked the World Bank for help in securing trade finance to prevent any shortages of essential goods.

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Saudi Arabia’s biggest construction company overhauled its top management, delaying plans to appoint an adviser for a proposed $15 billion debt restructuring, people familiar with the matter said, Bloomberg News reported. Saudi Binladin Group’s previous chairman and managing director left within months of being appointed, the people said, asking not to be identified because the matter hasn’t been made public. The company also named four new directors to its board this week, they said.

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Lebanon’s central bank on Wednesday dramatically lowered interest rates on dollar and Lebanese pound deposits and loans — the latest measure to shore up the country’s banking system amid a burgeoning economic crisis, the International New York Times reported on an Associated Press story. Banque de Liban also announced that for the next six months it would pay 50% of the interest it owes banks on dollar deposits and deposit certificates in Lebanese pounds— a move that would also ease the demand on the dollar.

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Courier app Fetchr, once one of the Middle East’s largest startups, raised as much as $10 million in emergency funding to help avoid collapse, Bloomberg News reported. The Dubai-based company, which offers delivery and logistics services to e-commerce firms, is also in the process of securing as much as $25 million in additional funding to turn the company around, according to people with knowledge of the matter.

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Lebanon’s central bank plans to slash interest rates in an attempt to ease the country’s economic crisis and is considering formalizing temporary capital controls set individually by local lenders, Bloomberg News reported. Governor Riad Salameh told the Association of Banks in Lebanon that he will issue a circular within days to lower rates “to revive the economy” and limit the increase in “doubtful” loans, according to a document summarizing the meeting and seen by Bloomberg.

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Lebanon may have just repaid $1.5 billion of Eurobonds, but its chances of escaping a default still look grim. It will probably come down to how far it can stretch its foreign reserves while containing the worst currency crisis since it pegged the pound over two decades ago, Bloomberg News reported. On both counts, recent developments have been negative. The central bank’s reserves dropped by nearly $800 million in the first two weeks of November alone.

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As Lebanon’s crisis-hit bonds flash warnings of a sovereign debt distress ahead, any potential restructuring is likely complicated by the absence of widely-used legal clauses barring bondholders from holding up the negotiations in the courts, Reuters reported. Lebanon is one of the few countries - alongside the Bahamas, Azerbaijan, Macedonia and Poland - to not include so-called enhanced collective action clauses, or CACs, in the legal framework governing its recent bond sales.

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Creditors of Abu Dhabi-based Al Jaber Group are considering enforcing claims against the owners of the group after delays in executing a restructuring agreement, the latest in a long-running debt dispute, two sources familiar with the matter said. Al Jaber, best known as a contractor but with interests across a range of sectors, has struggled since a construction downturn in the United Arab Emirates after the global financial crisis, Reuters reported.

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Saudi Arabia is closely monitoring how much banks are lending to local investors rushing to buy shares in Aramco and what impact the mammoth offering will have on the kingdom’s financial sector, Bloomberg News reported. The Saudi Arabian Monetary Authority wants daily updates on how much credit banks are providing after it eased lending limits for buyers, according to people with knowledge of the matter.

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