Lebanon wants to delay the deterioration of its sovereign rating

Lebanon wants to delay the deterioration of its sovereign rating

Beirut: Ali Zinedine

The Lebanese financial authorities have asked the credit rating agencies, especially Standard & Poor's, to delay from the end of the month of August their report on Lebanon, which must badess the solvency of the public debt in foreign currency. For the last year.
The sources pointed out that this decision comes after strong expectations that the credit rating agencies should reach the rating agencies, namely to reduce the sovereign rating of Lebanon from -B to CCC.
Samir Hammoud, Chairman of the Banking Supervision Committee, said he hoped to respond to this wish, saying that he was "not completely rebadured" by S & P.
In a televised interview yesterday, he said the Lebanese Central Bank was ready to cope with this expected development and absorb its possible repercussions. Markets have been determined to reduce the rating, prices of securities and shares issued by public and private institutions have decreased consecutively, A rise in the demand of the dollar in the market down and interest rates more Eurobonds, up 14% in the short-term segments.
Indeed, the combined capitalization of the shares listed on the Beirut Stock Exchange has reached the threshold of $ 8 billion. This led to the contraction of the weighted average price of the book value of the listed shares to 0.564 at the end of July, compared to 0.736 at the end of March in the same month of last year, due to the sharp fall in the price level of the shares. listed shares.
It should be noted that the dramatic fall in share prices includes both listed and unlisted sectors of all sectors, particularly the banking sector, which has fallen on average by more than 20% since the beginning of this year. The majority of them belong to four of the biggest banks listed on the Beirut Stock Exchange and on the external financial markets, as well as to real estate actions led by Solidere (downtown Beirut), cement , services and others.
In the Middle East, domestic and foreign investors in the management of Lebanese securities portfolios have fluctuated sharply. Holders of bonds and equities suffer from low prices and low yields, which raises more and more concerns as part of the fiscal badessment. Components of capital and private funds, including equities and bonds, at current prices or by adopting a similar price benchmark in the event that the Company's shares are not traded on the stock exchange.
The incentive to abandon some or all of these portfolios increases bank offers by paying interest of up to 15% on new dollar-denominated investments in excess of $ 1 million. In turn, the banks reap the proceeds of the Central Bank of Lebanon, which gives them good returns on the dollar through special operations (financial engineering), supported by an immediate loan of about 125% of the amount in pounds Lebanese at a reduced rate and then re-employed with market interests.
This brings the real return between 17 and 19%, noting that these offers contribute to the negative growth of bank lending in the retail, corporate and large business sectors.
In particular, the decommissioning would impose additional allocations on Lebanese banks, since these bear more than the current 30 billion Eurobonds. Banks also hold about 33.4% of the total public debt in lire.
The central bank's share is about 52%, with a total public debt of about 85 billion, of which 53 billion in lira, which is not very affected by the degradation, and about 32 billion dollars in foreign currency. Eurobonds, the vibration center of rating degradation.

Lebanon

Lebanon News