Lebanon close to new rescue plan as EIB steps up MENA funding

Geopolitical issues such as the migration crisis has heightened the need for the European Investment Bank to launch facilities such as Economic Resilience Initiative fund to help attract private capital into the troubled North African region

  • By EuroWeek Editor 1
  • 20 Oct 2019
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 The political fragility of the Middle East and North Africa is uppermost in the minds of lenders to the region, most recently after Lebanon descended into violent protests over the state of the economy last week. The country’s central bank governor told GlobalMarkets the country had a plan to restore economic stability. Meanwhile, the European Investment Bank is stepping up its lending.

The EIB hopes to drive private investment in a regional push for infrastructure development.

Luca Lazzaroli, EIB’s deputy head of operations, said the bank was paying increased attention to the MENA region for geopolitical reasons such as the displacement of people. It has launched an Economic Resilience Initiative Fund.

“It’s a particularly important region for us — it’s our neighbourhood, so it carries specific relevance,” he said. “There’s a shared desire to increase the region’s integration economically and socially with the EU.”

Meanwhile, Riad Salame, Lebanon’s central bank governor, told GlobalMarkets the country would unveil a radical structural reform programme to stave off imminent default through a budget that would cut the deficit without resorting to taxes.

Egypt, fresh from a punishingly austere IMF programme, is, according to Lazzaroli, the EIB’s most important Mediterranean partner. Egypt is leaning on the EIB and other development partners like the AfDB and World Bank to help it finance an ambitious programme of infrastructure reforms to boost growth and attract foreign investment.

Mohamed Maait, Egypt’s finance minister, said: “When private investors see EIB investing in the country, it gives them confidence and encourages them to invest too.”

The EIB helped Egypt fund the largest solar plant in the world, commissioned this year at a cost of $4bn. Benban Solar Park, together with investments in oil and gas infrastructure, is allowing Egypt to become an exporter of energy. “Bringing down the cost of energy is a big help to the steel industry, and we are freezing energy tariffs so there will be no more hikes,” said Maait.

Garbis Iradian, chief MENA economist at the Institute of International Finance, said Egypt had “made progress in improving the business environment but a great deal more will be needed.”

The EIB has around €2bn of exposure to Lebanon and a strong pipeline of investments. Salame said on Saturday evening that the government and prime minister were working to set a budget. “We are expecting the government to meet, resignation is out of the way,” he said. “This meeting might take place in the coming two days. The prime minister has given 72 hours for himself to come up with a solution.”

The reform would cut the deficit almost to zero in three years. The government is contemplating privatisations and laws to deter corruption. Infrastructure investments will be financed by external lenders in the CEDRE group and the private sector would be involved, itself an important reform.

  • By EuroWeek Editor 1
  • 20 Oct 2019

All International Bonds

Rank Lead Manager Amount $b No of issues Share %
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1 JPMorgan 353.47 1629 8.35%
2 Citi 326.07 1388 7.70%
3 Bank of America Merrill Lynch 283.34 1182 6.69%
4 Barclays 259.26 1043 6.12%
5 HSBC 207.22 1150 4.89%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $b No of issues Share %
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1 BNP Paribas 39.66 183 7.00%
2 Credit Agricole CIB 37.82 159 6.67%
3 JPMorgan 30.63 81 5.41%
4 Bank of America Merrill Lynch 26.33 79 4.65%
5 Deutsche Bank 26.03 96 4.59%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $b No of issues Share %
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1 JPMorgan 11.22 75 9.54%
2 Morgan Stanley 10.77 52 9.16%
3 Goldman Sachs 9.63 50 8.19%
4 Citi 7.78 60 6.61%
5 Bank of America Merrill Lynch 5.53 30 4.70%