Finance Minister Mohammad Safadi said Lebanon plans to raise $2 billion in Eurobonds this year after borrowing costs of the most indebted Arab country dropped to a record.
“We are now talking to the financial markets to get their advice on when is the best time” for the sale of benchmark-size bonds, Safadi said in an interview in his office in Beirut today. The government also plans to exchange existing debt valued at $3 billion with new Eurobonds in the coming year, he said. The ministry hasn’t appointed advisers to manage the planned sale, he said. Benchmark-size typically means a sale of at least $500 million.
Lebanon last tapped international bond investors in March, raising $600 million in 5 percent dollar bonds due October 2017 and increasing the size of its 6.6 percent bond due November 2026 by $350 million to $725 million. The government plans to use the proceeds of the $2 billion sale for infrastructure investments in electricity and gas, Safadi said.
The yield on the 6.6 percent dollar bonds rose one basis point, or 0.01 percentage point, today to 6.29 percent, six basis above the low on March 23, data compiled by Bloomberg show. Therisk premium investors demand to hold Lebanese debt instead of U.S. Treasuries rose five basis points this year to 389, lower than similarly rated countries such as Egypt, Senegal andGhana, JPMorgan Chase & Co. data show.
Lebanon is rated B1 at Moody’s Investors Service, four levels below investment grade. Standard & Poor’s rates the country one level lower.