Lebanon Follows Ukraine With $1.1 Billion Overseas Bond Offering
Lebanon plans to sell overseas dollar bonds for the first time in 2013 during the busiest week for emerging-market issuers this year.
The most-indebted Arab country plans to sell $600 million of bonds due in 2023 to yield 6.15 percent and $500 million in securities maturing in 2027 at 6.70 percent, according to a person with knowledge of the offering who asked not to be identified because terms aren’t set. Middle Eastern dollar bonds yield 5.72 percent on average, according to data compiled by JPMorgan Chase & Co.
Lebanon is joining countries from Mexico to Indonesia to sell debt abroad this week and take advantage of a drop in borrowing costs. This is the busiest week in 2013 for emerging- market issuers, with more than $17.9 billion sold worldwide, according to data compiled by Bloomberg.
The expected borrowing costs for Lebanon, whose Standard & Poor’s B rating is five levels below investment grade, compare with an average 6.90 percent for similarly ranked Ukraine. The European country sold $1.25 billion of 10-year dollar bonds on April 9 with a yield of 7.50 percent, according to data compiled by Bloomberg.
The extra yield investors demand to own Lebanese bonds instead of Treasuries widened 1 basis point, or 0.01 percentage point, to 434 points at 2:21 p.m. in New York, according to JPMorgan’s EMBIG index.
In November, Lebanon sold $525 million of bonds in a reopening of its 2018 dollar securities. The Finance Ministry said April 9 that the country plans to issue as much as $1.5 billion of bonds in exchange for local-currency debt with the central bank.
The resignation of Prime Minister Najib Mikati on March 22 deepens the political divide in Lebanon and is a “credit negative” for the country, Mathias Angonin, an associate analyst at Moody’s Investors Service, wrote in a March 26 note. It rates the country B1, four grades below investment grade.
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