Lebanon's Bond Crisis: Time to Act

“Lebanon Debate”

Since the financial collapse in 2019, successive governments have seemingly overlooked a looming danger that has now become imminent. They deliberately or out of “ignorance” ignored the possibility of being sued by all those who bought the treasury bonds in foreign currencies or Eurobonds as these buyers are preparing themselves today to file lawsuits against Lebanon to obtain their money, in other terms, Lebanon’s assets abroad, especially gold, could be seized.

Professor Fouad Zmokhol, the dean of the business school at USJ, has emphasized that this threat could be mitigated through negotiations with creditors or by repurchasing the bonds from them.

In an interview with “Lebanon Debate”, Zmokhol emphasized that the decision to financially default in 2020 was an economic crime against Lebanon and the Lebanese, as it was a hidden bankruptcy decision despite the presence of 30 billion dollars in the reserves of the Central Bank. However, Zmokhol identified the failure to negotiate with Eurobond holders and the absence of a reform plan as the biggest error of all.

He revealed that many Eurobond holders, including prominent companies like Ashmore and BlackRock, have refrained from taking action thus far, anticipating reforms that would enhance bond values. however, these companies will now be initiating legal proceedings against Lebanon before the international judiciary system.

About the other treasury bonds holders, the dean highlighted that a number of these bonds belong to Lebanese individuals, companies and banks who typically invest in emerging markets. Despite the many risks, they are known for waiting for approximately five years for reforms and potential assistance from the IMF before taking action.

With the five-year mark fast approaching, Zmokhol warns that the deadline set for March is rapidly closing in, with Eurobond holders gearing up to pursue legal action against the Lebanese government.

Expecting a restructuring plan and financial support from the IMF in exchange for reforms, these holders have been left disappointed. Moreover, they had hoped for intervention from the Lebanese government or other entities to purchase the bonds, yet no such actions materialized.

Consequently, they are now preparing to file criminal lawsuits against the Lebanese government before March 2025 to safeguard their rights. The imminent expiration of the five-year timeframe in addition to the other factors that were mentioned have pushed them to take the legal path as they seek to access assets held by the Lebanese state abroad.

Zmokhol sounded the alarm, emphasizing the pressing need for negotiations with Eurobond owners to save Lebanon from any potential lawsuits and assets seizure.



ذهب لبنان في مرمى حاملي اليوروبوند... الحكومة تدفن رأسها في الرمال!