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No Exit

15 January 2020 by jbchevrel

Lebanon (LEBAN) CDS mid inched closer to 59% this AM before reverting to 58.5% mid on the 5y. Things there aren’t going any better. Lebanese protesters spilled back into the streets yesterday after a brief letup, blocking major highways as they denounced the lack of a functioning government at a time of deepening financial and economic crisis. Demonstrators used burning tires and trash to build barriers in Beirut, and across the country, blaming politicians for deteriorating living conditions. They also rallied outside the central bank (BDL) headquarters. Lebanon’s plan to get local banks to swap into longer-maturity Eurobonds may be meeting resistance and signals growing financial stresses in the country, according to JPM. Local lenders started selling a $1.2b bond after the BDL proposed an exchange into other instruments when it matures on March 9. BDL head Salameh said last week the plan was “preemptive” and dependent on the banks’ consent. While he didn’t say what the terms of the new bonds would be, JPM analysts said locals may be asked to swap into existing sovereign $ bonds (11.5 Nov29 and 12.0 Jul35). Locals have started selling the Mar20 Eurobonds, which could suggest that the banks have a limited appetite for the BDL proposed swap. The move from the BDL confirms the high near-term liquidity stress. the 6.375 Mar20 dollar notes are in the area of 88, the 5.8 Apr20 dollar notes are ~82, Jun20 dollar notes are ~78. In CDS space, Mar20 is ~15, Jun20 is ~30 and 1y is ~40