Lebanon Bond-Swap Plan Sputters as Rating Firms Warn of Default
- Rating companies said to view swap as a distressed exchange
- Lebanon finance ministry said to tell central bank to hold off
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Lebanon’s plan to steer through its debt crisis by getting local investors to swap into longer-dated Eurobonds has come unstuck after rating companies warned they would consider it a “selective default,” a person familiar with the matter said.
The Finance Ministry sent a letter to the central bank Wednesday asking it to hold off on the deal, according to the person, who asked not be identified because the information isn’t public. Based on their communication with the ministry, rating companies could declare Lebanon to be in breach of its obligations “because it is considered a distressed exchange,” the person said.