Financial .. This is what a new report revealed on Lebanon

The prices of the Lebanese government bonds, which the government stumbled in its payment, increased to nearly four times during the past year, as investors bet on the indicators of economic recovery, but the great contrast in its potential value estimates after the restructuring may restore any other rise.

The “recovery value” of the bonds will not become more clear, until the legislators decide the level of losses that troubled local banks must bear, which in turn will determine the amount of money that the government can transfer to bond holders, according to a report published by Reuters.
The bonds rose from only 6 cents to the dollar a year ago to nearly 24 cents, following a political breakthrough that ended more than two years of government paralysis, which exacerbated the economic crisis in Lebanon.
The formation of a new government in February stimulated the gains, as investors hope that the authorities will bring the country closer to obtaining reconstruction funds, after a devastating war between Israel and Hezbollah.
However, some fixed income analysts say that the height may have come before its time in the countless things that are blurry, especially regarding the “value of recovery” bonds, and this number is what the value of the bonds will be, after the long -awaited restructuring of the debts that are necessary to revive the economy. Recover in a wide range from 20 to 40 cents. ” “Of course, there are also more negative perceptions if we do not get an agreement with the International Monetary Fund next year,” he added.
Hopes rose that Lebanon could obtain a rescue package from the IMF to help rebuild, after the fund last June said that the country has made progress towards an agreement. A team from the bank will visit Beirut this month to pay the discussions. The rally of progress
After failing to pay his international bonds due to $ 31 billion in March 2020, the financial crisis in Lebanon worsened, which led to the depletion of the public budgets of banks and the loss of the currency 99% of their value.
The bonds decreased to less than 6 cents, with hopes of restructuring the debt, or a decisive rescue plan from the International Monetary Fund.
In the aftermath of the parliament’s election of a new president last January, the lawmakers of the long -awaited banking sector, one of several necessary legislation to reform the financial system. Investors benefited from what Farouk Sousse, an economist at Goldman Sachs, described as a “contrast” in very cheap bonds. But he said that the remaining obstacles are likely to be greater than some investors, who are driven by fears of missing the opportunity to achieve huge returns.
Likewise, the Central Bank of Lebanon itself warned last week that the high global interest rates would complicate its efforts to restructure its international bonds. Watch “the financial gap”
The level of losses that insolvented banks must bear, known as the “financial gap”, is the difference between banks ’obligations and their assets. Many do not expect the deputies to approve decisive legislation that determines this matter before the elections in May 2026.
Estimates vary greatly, and their account is complex and is affected by political factors, but it is essential to determine the value of bond recovery.
Two years ago, the International Monetary Fund estimated that the Central Bank – which represents the largest part of the gap – may end up with negative ownership rights of $ 60 billion. In March, the accounts of the International Finance Institute indicated the negative property rights to the Central Bank of Lebanon, to 48.4 billion dollars from 76.4 billion dollars at the end of 2022.
The volume of what the government must bear will determine what the IMF will be considered “potential” for Beirut, to be pushed for bond holders and others in a restructuring process.
Even after the basic numbers, including the financing gap, are clear, the recovery value will also vary depending on how to include the late interest, which was estimated by JP Morgan at $ 14.3 billion, and the level of value reduction operations that bond holders will have to carry. (24)