Jebaee: the fate of the Eurobonds

“Lebanon debate”

The Eurobonds market has experienced high demand, leading to an increase in bond prices. This surge occurred amid reports of the Lebanese government's intention to repurchase bonds that had depreciated since the onset of the crisis in 2019. Despite the government's failure to repay these bonds, financial firms rushed to purchase them, anticipating additional profits upon learning of the government's plans for repurchase.

In this context, economic and financial researcher, prof. Mahmoud Jebaee, stated in an interview with “Lebanon Debate”: “The price of the Eurobonds witnessed a rise today amid news that the Lebanese government's intent to buy some of these bonds. This is particularly significant as Lebanon will have to negotiate in a few months’ time with bondholders to avert potential lawsuits against the country.

Jebaee explained that financial firms were motivated to buy these bonds, to make future profit, and considers that the rise of the price is due to the increase in demand.

The researcher confirmed that in case the Lebanese government starts negotiating with the bondholders, then it will be expected to witness another rise, by a determined rate, albeit below the bonds' actual value.
The researcher emphasized that the implementation of an economic recovery plan, coupled with measures to reimburse Lebanese citizens and secure future measures, would drive prices even higher.

According to Jebaee, all of these factors are integral to financial companies' operations, and an increase in prices is a normal occurrence.
Jebaee hopes that Lebanon will put in place a clear recovery mechanism, adding that the Lebanese government cannot step away today from the loans it has to pay. He underscored that debt scheduling is a main pillar in any future economic and financial recovery especially since the government “hard defaulted” and did not opt for discussion with bondholders.

Therefore, it is fundamental for the government to schedule the debts in order to resolve all crises in the next phase.


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