Lebanon issues USD 500mn bonds before conclusion of general elections. Lebanon issued US dollar denominated bonds worth USD 500mn. The bonds, issued in two tranches, have a maturity period of 3-years and 8-years. The bond issue is to finance the government's needs and extend the maturity period of the outstanding debt.
S&P assigned B- foreign currency senior unsecured debt rating to the USD 500mn bond issue. S&P also affirmed the B- long-term and C short-term foreign and local currency sovereign credit ratings on Lebanon with a stable outlook. S&P's Credit Analyst, Farouk Soussa said that the ratings reflect the government's weak fiscal position and the economy's vulnerability to domestic and external shocks.
S&P's report said that the budget deficit is better than expected with lower government debt to GDP ratio. Lebanon's budget deficit has declined 5% y/y to USD 1.955bn during Jan-May 2005 from USD 2.116bn in the corresponding period of the previous year. However, the country's fiscal flexibility continues to remain under pressure, as interest payments accounts for 52% of revenues.
Soussa said that the projected 174% of GDP government debt to GDP ratio as at end 2005 is among the highest of all rated sovereigns. Soussa said that he expects the country to overcome the continued interruptions in key structural reforms and near-term political uncertainty. However, Soussa said that if the political impasse continues for a longer duration, there could be a financial crisis, which could pressurise the ratings.