Omar al-Rassi, “Akhbar al-Yawm” agency

Eurobonds at their highest level.. Is there still an opportunity to repurchase some Bonds by Lebanese state?

Financial source to "Akhbar al-Yawm": These are the procedures that must be followed...

Despite the tension and instability of the situation in Lebanon over the past months, the value of Eurobonds has increased significantly, increasing its price from 6.36 cents per dollar for the bond last June to 9.18 cents per dollar about a month ago to 10.46 cents per dollar a week ago and then 11.72 cents per dollar last Friday.

Is there still an opportunity to repurchase some Bonds by the Lebanese state despite the rise in prices?

A financial source pointed out via the "Akhbar al-Yawm" agency that Lebanon was supposed to repurchase a part of Eurobonds before the prices rose, because the repurchase was supposed to take place during difficult circumstances.

The source explained that the repurchase of these bonds from foreigners saves money on the state, because the value of these bonds was estimated by Goldman Sachs at about 25 cents, which means that the price is still acceptable, and the purchase by foreigners may improve the state's negotiating position when restructuring because Lebanon needs the approval of a majority of bondholders.

Hence, the source believes that the negotiating conditions of the Lebanese state should be improved, and this should be done by reducing the percentage of foreign bondholders. Considering that such measures improve the situation of depositors, especially since this constitutes a step in the repayment of debt from the part of the Lebanese state, in addition to getting rid of a debt subject to New York law at a very low price.

As for the amount that the Lebanese state can buy, the source said: "It is up to 10% without making a public purchase offer, and the Banque Du Liban can also buy these bonds through an agreement with the state, knowing that the better the situation, the higher the prices, especially if serious reforms will take place.

On the other hand, in response to a question about the possibility of extending the deadlines related to the date of Eurobonds bondholders's right to claim the accumulated legal benefits, the source said that the state is likely to extend the contractual and legal time periods, but this extension does not prevent lawsuits by bondholders, but if it is not extended, the lawsuits will be inevitable, since the state is defaulting on payment.

What can happen if these lawsuits are filed? The source said: First, we must wait for the issuance of judgments, and then the assets of the Lebanese state located abroad can be seized, and since the state does not have many of these assets, and therefore there may be an attempt to seize the assets of the central bank, but the Bank of Lebanon enjoys immunity.

In any case, the purchase of Eurobonds remains an insufficient step because reforms and correction of state budgets are essential to get out of the crisis, the source concluded.