The Republic of Lebanon resurrected its sale of around $850m of new Eurobonds from its debt exchange offer earlier this month when four local banks stepped in to sell the new two tranche deal on Tuesday.
Lebanon's Banque Audi, Banque de la Méditerranée, Byblos Bank and Fransabank rescued the bond issue by selling $750m of the sovereign's 15 year series 42 bonds and Eu175m of five year series 43 bonds.
They priced the bonds at par plus accrued interest from April 12, when the Ministry of Finance cancelled the initial transaction, which was the cash part of a transaction in which Lebanon issued $2.618bn of new Eurobonds, some for cash and some in exchange for old Eurobonds maturing this year.
The four banks sold the new dollar tranche, which has an 8.25% semi-annual coupon, to yield 323bp over the equivalent US Treasury note. The euro bond, with a 5.875% coupon, was priced at 207bp over comparable bonds, the banks said.
A fortnight ago Lebanon was forced to cancel the cash part of its sale because of arbitration proceedings brought against the government by Lebanese mobile phone company LibanCell and FTML, a local subsidiary of France Télécom.
Lebanon cancelled $73.098m of its $750m 2014 Eurobond; $588.531m from its $1.5bn 2021 deal; and Eu150.458m from its Eu300m 2012 Eurobond.
The arbitration concerns the government's award of build-operate-transfer contracts to the two companies in 2001. It then revoked them in 2002.
The government later reached a settlement with FTML over compensation awarded by arbitrators, but has yet to recompense LibanCell, which continues to demand payment.
Legal concerns that the two companies might have tried to seize Lebanese state assets led the government to forgo $844m of the $2.618bn of debt it raised by issuing three new Eurobonds, partly for cash and partly in exchange for old Lebanese bonds.
In securing the cash for the government, the four Lebanese banks did what international investment banks could not, however.
BNP Paribas, Credit Suisse and Banque de la Méditerranée had arranged the exchange offer and subsequent bond issue, but the French and Swiss banks could not underwrite the new cash element because of an injunction from the arbitrators in many countries, including the UK and US.
This meant that any new money raised could be claimed by the litigant companies.
Ukraine plans to issue a Eurobond of around $500m. Vitaliy Lisovenko, deputy finance minister, was quoted as saying the government planned to return to the international bond market later this year and that it had also reached a preliminary agreement to borrow $500m from the World Bank. Lisovenko said Ukraine planned to raise $2bn-$2.5bn in the local and international markets this year. This money and revenue from privatising industries will finance the government's budget deficit.