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This August 5, 2020 file photo, is the scene of an explosion that hit the seaport of Beirut, Lebanon. 217 killed ,7000 Injured after several hundred tons of ammonium nitrate exploded . 2750 tons were stored there for nearly 7 years, reportedly for use by the Syrian regime in its barrel bombs. The shipment was reportedly confiscated by Badri Daher a close associate of President Michel Aoun and his son-in-law Gebran Bassil , both are allied with the Syrian regime . The shipment arrived at a time when Syria was surrendering its chemical weapons to a UN backed organization for destruction . Aoun officially knew about the Ammonium Nitrate 2 weeks before the explosion but did nothing about it . He , along with his Hezbollah allies refused an international investigation but promised a local investigation that will bring the culprits to justice in less than a week but 8 months later not one politician has been charged. According to an investigation by FBI only 20 % of the chemical exploded . Several intelligence reports revealed that Hezbollah shipped most of the nitrate to Syria and used the rest in Germany , UK and Cyprus (AP Photo/Hussein Malla, Beirut, Lebanon(Photo by Anwar Amro/AFP)

By Dana Khraiche and Ben Bartenstein

International holders of Lebanese debt urged the new government to resume long-delayed efforts to restructure the country’s Eurobonds and said they were ready to work closely with authorities to find a sustainable solution.

The “Ad Hoc Lebanon Bondholder Group” comprises several large institutional holders of sovereign bonds issued by Lebanon. It was formed in March 2020 after Lebanon defaulted on $30 billion of Eurobonds.

“The Group hopes and expects the new government will promote a speedy, transparent and equitable debt restructuring process,” it said in a statement. “Such a process will need the government to engage meaningfully with the International Monetary Fund as well as Lebanon’s international creditors and official sector partners.” 

Some of the nation’s largest bondholders, including BlackRock Inc., Ashmore Group Plc and Fidelity, are members of the creditor group, according to a person with direct knowledge of the matter. BlackRock, Ashmore and Fidelity didn’t immediately respond to requests for comment via email on Tuesday.

International investors hold a substantial chunk of Lebanon’s Eurobonds. A deal with them is essential if the government is to eventually return to the debt market but there’s been virtually no progress in the past 18 months due to a prolonged political deadlock.

Lebanon began bailout talks with the IMF after the default and drafted a plan to restructure its entire $90 billion debt stock, which would have largely wiped out the capital of the country’s banks. The talks stalled after local lenders and the central bank, the country’s largest debt holders, campaigned for a different approach to assess and distribute the losses. 

Lebanon is facing one of its biggest crises in modern history. Its currency has lost about 90% of its value in the past two years, driving hyperinflation and battering the economy, which contracted about 25% last year. Unemployment has soared as companies have closed down, prompting a wave of emigration among the country’s educated youth. Politicians have done little to halt the collapse that’s plunged more than half the population into poverty and resulted in severe power and fuel shortages. 

Last week, billionaire businessman and former Premier Najib Mikati managed to form a new government after nearly 13 months of political paralysis, vowing to resume talks with both the IMF and Lebanon’s creditors. The central bank is fast running out of reserves, forcing the new government to begin reducing subsidies on fuel and pharmaceuticals. 

The group of bondholders said the the aim of the government “must be to design and implement a comprehensive program of economic, fiscal and structural reforms in the interest of all stakeholders, and most importantly the long-suffering Lebanese people.”

BLOOMBERG

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