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World Bank update about Lebanon

Omeros

Omeros

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there is ntgh called junk level in economics
 
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  • Omeros

    Omeros

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    In brief , Junk when it comes to bonds credit rating means below investment grade. This means higher risk of default or not being able to pay back to the bond holders.
    got it but the structure of the syntax in an economical sentence is not clear ,
     
    Nonan

    Nonan

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    i was searching since 2 hrs seems the junk level is based on junk bonds but junk bonds arent the bonds of the gov
    fham eza fik tefham
    It’s based on the level of risk and what investment managers are allowed to hold / invest in. You can have government bonds that are junk bonds... just look at Venezuela (or prior examples like Argentina). When there is a significant risk of default, they become “junk”.
     
    V

    Viral

    Active Member
    Terribly sorry to disappoint the doom and gloom drama Queens who are quick to bring in fake negative news about their own country to hurt its people when they don't even live in it...
    Terribly sorry guys and girls...



    Lebanon Holds Firm on Peg With $1.4 Billion Boost to Reserves

    Lebanon’s central bank has secured up to $1.4 billion in five-year deposits from private investors overseas, boosting dollar reserves in one of the world’s most-indebted countries and easing concerns that it could struggle to repay its debts and defend its currency.


    Governor Riad Salameh said in an interview with Bloomberg TV in Beirut that Banque du Liban remains committed to preserving the Lebanese pound’s peg of about 1,507.5 to the dollar, in place for more than two decades, and has “ample” cash to do so.


    “Contrary to what is being said, the supply of dollars is ample in the market,” he said on Friday. “Today, the central bank has closed deals of deposits with private, non-resident institutions, whereby in the second half of August our reserves went up by $1.4 billion to reach $38.6 billion. This is private non-resident money and not government money.”

    Deposits were collected from Lebanese and non-Lebanese funds and mutual funds abroad at central bank interest rates in what Salameh described as a “new approach for us.”


    Salameh’s comments are likely to go some way toward reassuring investors increasingly worried about dwindling inflows of cash from abroad and political divisions that have slowed the pace of fiscal reforms needed to unlock $11 billion in international aid pledged to revive the country’s economy.

    Will Repay Eurobond
    Fitch Ratings last week cut Lebanon’s credit ranking deeper into junk territory, taking it down to CCC. Credit default swaps, which reflect the cost of insuring debt holdings against the risk of default, have scaled record highs in recent weeks as investors fret that Lebanon’s day of financial reckoning is looming.

    Salameh said the central bank had already set aside $1.5 billion to cover in cash on behalf of the government the next maturing Eurobond in November.
    “The policy of the central bank is to back the solvency of the state because it’s in the interest of Lebanon and the interest of monetary stability,” he said. “It’s like our commitment to the peg.”

    The extra yield investors demand to own Lebanese sovereign dollar bonds rather than U.S. Treasuries erased its increase after Salameh’s comments. The spread was down 9 basis points to 1,211 as of 2 p.m. London time. The international bond maturing in 2030 extended gains slightly after the news.
    To keep its banks stable and able to defend the peg, this tiny, open economy has for decades relied on deposits that are constantly replenished mainly by the millions of Lebanese living abroad. Those inflows dropped as fears of an impending banking crisis rose, with deposit growth entering negative territory in May for the first time in more than a decade, according to Goldman Sachs Group Inc.

    No Debt Restructuring
    Promises of assistance from Saudi Arabia and Qatar, energy-exporting Gulf Arab countries that helped pull Lebanon back from the brink in decades past, have yet to materialize, Salameh said.
    The International Monetary Fund estimates that Lebanon’s public debt burden will rise to near 180% of economic output by 2023 but the government has never defaulted on its debts despite rolling political crises and even war.
    Salameh ruled out debt restructuring though the central bank is working with the government on potentially unconventional methods to reduce crippling servicing costs. He said any such plans had to be carefully calibrated to avoid stoking investor concerns that the government was restructuring by the back door.
    The central bank has, since 2017, been engaging in what it terms non-conventional financial engineering to encourage local banks to continue supplying hard currency. The latest effort in June is believed to have boosted foreign reserves though the IMF has warned the policy carries significant risks.

    Salameh said the financial engineering program would continue until the fiscal situation -- Lebanon has twin budget and trade deficits -- had stabilized. President Michel Aoun has convened a meeting of top officials on Monday to discuss reforms that are needed to curb the country’s deficit but have faced stiff opposition from the public and politicians wary of alienating their supporters.

    New Debt?
    Average economic expansion hasn’t exceeded 1% in the past five years. Salameh said growth was estimated to average about 0.5% this year as political tensions and a troubled neighborhood canceled out the impact of a much-hyped revival in tourism.

    The government has formulated reforms to unlock the aid pledged at a donor conference last year, but plans included a strong dose of austerity and stirred public anger in Lebanon, where hosting refugees from the war in neighboring Syria has further strained finances.
    “The government is thinking of doing new issues in the future which will revive the foreign liquidity,” Salameh said, declining to give details. “It’s linked in part to the political situation in the country and the region and linked on another side with the budget situation and finances of the government. Nevertheless, I do believe that our bonds are clearly undervalued.”
     
    Rafidi

    Rafidi

    Legendary Member
    Why? Lebanon is a third-world shithole.
    Shame on you for saying that. When you travel and experience what shithole countries look, and feel like and actually are, you'd know that Lebanon is a little Paradise in comparison.
     
    Robin Hood

    Robin Hood

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    Shame on you for saying that. When you travel and experience what shithole countries look, and feel like and actually are, you'd know that Lebanon is a little Paradise in comparison.
    But look at the electricity and the garbage.
     
    ّTelefon Kasse

    ّTelefon Kasse

    Member
    looks like UAE is going to buy more Lebanon .. congratulations .. la walla 7oukoumeh gheir shekel
    UAE buys Lebanon, Yemen and Saudia Arabia buying Bahrain and Egypt
     
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