Can the State buy its own Eurobonds?

Can the State buy its own Eurobonds?

| Friday 23 September 2022

Omar al-Rassi, "Akhbar al-Yawm" agency 

On March 7, 2020, the government of President Hassan Diab announced the default of payment of Eurobonds in foreign currencies. And despite the fact that all the financial and economic experts agree that this measure constituted economic suicide for Lebanon, the State did not deal with the file.

But in recent weeks, the value of these bonds has fallen, which means that Lebanese holders of Eurobonds prefer to get rid of them and sell them at a time when there is no demand to buy them, l state take advantage of the situation and offer to buy them?

A financial expert explained, via the "Akhbar al Yawm" agency, that such an approach should be done in coordination with the International Monetary Fund, especially since there are many holders of bonds or funds in the category cultural funds, that is, opportunists who seize opportunities to make gains.

He added: This is where the importance of negotiating and agreeing with the IMF lies, because this negotiation aims not only to obtain 3 billion dollars, but to form a compulsory corridor for negotiations on behalf of Lebanon. with Eurobonds bondholders to seek an integrated solution, thus protecting the Lebanese state, noting that the absence of collective action clauses weakens the country's bargaining capacity, especially after its announcement of default.

In this context, the financial expert estimated that the State does not have the funds to buy these bonds or part of them, knowing that its financial situation lacks a lot of transparency to determine what it has and what which he doesn't, saying even though bonds are currently "cheap" cannot be bought at random without an integrated solution, it will lead to the opposite result, whereas a comprehensive and integrated solution is needed to through the Monetary Fund.

Noting that failure to pay means that Lebanon will not pay, the source asked: why, therefore, did the "opportunistic funds" take no action against Lebanon?" And why did the price Does it drop? Do they consider the drop a confirmation that Lebanon will not reach a solution?

He stressed that all these measures should be part of an integrated basket with all holders and not with a category of them, warning against the policy of patching, especially since the legal situation in Lebanon is weak

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