Lebanese eurobonds rally extends following state arms monopoly decision
The rally followed the government's historic decision to enforce a state monopoly on arms, said Saeb al-Zein, former hedge fund manager and emerging markets financial analyst.
The country's battered bonds have been rising since late September 2024, coinciding with the escalation of the Israel–Hezbollah conflict into a full-blown war. At the time, their value jumped from 6.2 cents to current levels.
Investors had been betting on Hezbollah's weakening and an improved economic outlook following the Nov. 27 cease-fire, which ended the year-long cross-border fire exchange.
'A similar rally took place when the Assad regime fell in December,' said Zein. 'This current surge is also politically driven, as investors anticipate greater state control over its own destiny.'
'Investors typically look three to six months ahead, so they're still betting on Lebanon as a country,' he added. 'With improved security, we could see more investors coming in and more capital inflows.'
'If we can get our house in order politically, I'm confident the economy will follow, driven by a thriving private sector,' he said.
Lebanon defaulted on its sovereign debt in March 2020 for the first time in its history. A restructuring agreement with eurobond holders has yet to be negotiated.
In December 2024, Goldman Sachs forecasted the recovery value of these debt securities to average 24.6 cents on the dollar in a 'base-case restructuring' scenario — the outcome it deemed most likely.
However, 'the actual recovery value will hinge on how the Parliament advances in addressing the gap resolution law, IMF negotiations and the fund's level of involvement,' Zein noted.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Nahar Net
an hour ago
- Nahar Net
Riachi says army's plan will satisfy everyone, even Hezbollah
by Naharnet Newsdesk 14 August 2025, 14:29 MP Melhem Riachi of the Lebanese Forces has said that the Lebanese Army's plan to monopolize arms across the country will 'surprise everyone.' 'The army's plan will surprise everyone with the solution it will represent and will be satisfactory to all Lebanese,' Riachi said in an interview on Al-Jadeed television. 'In my opinion, it will even be satisfactory to Hezbollah,' Riachi suggested. 'The army will perform its work in a wise, experienced and firm manner,' he added. The Lebanese government has tasked the army with drawing up a plan to disarm Hezbollah by the end of the year. Hezbollah has slammed the government's disarmament push as a "grave sin" and said it will treat the government's resolution 'as if it does not exist.' Lebanon's cabinet has also approved the objectives of a U.S. proposal that includes a timetable for Hezbollah's disarmament, with Washington pressing Beirut to take action. Before the latest war with Israel, Hezbollah was believed to be better armed than the Lebanese military. It long maintained it had to keep its arsenal in order to defend Lebanon from attack, but critics accused it of using its weapons for political leverage.
Nahar Net
an hour ago
- Nahar Net
Qassem meets Larijani, thanks Iran for 'continuous support'
by Naharnet Newsdesk 14 August 2025, 13:52 Hezbollah chief Sheikh Naim Qassem has met with Ali Larijani, the head of Iran's Supreme National Security Lebanon, who began a visit to Lebanon on Wednesday, Hezbollah said in a statement. The meeting was held in the presence of the visiting Iranian delegation and Iranian Ambassador to Lebanon Mojtaba Amani, the party added. During the meeting, Qassem thanked Iran for 'its continuous support for Lebanon and its resistance against the Israeli enemy, as well as its support for Lebanon's unity, sovereignty and independence, emphasizing upon the brotherly ties between the Lebanese and Iranian peoples,' Hezbollah said. Larijani had met Wednesday with President Joseph Aoun, Speaker Nabih Berri and Prime Minister Nawaf Salam. Aoun and Salam firmly rejected any efforts at foreign interference by Iran or other countries, with the prime minister saying Beirut would "tolerate neither tutelage nor diktat" after Tehran voiced opposition to plans to disarm Hezbollah. The uncharacteristically blunt remarks hinted at a changed balance of power in a country where Iran has long wielded substantial influence by funding and arming Hezbollah. The visit by Larijani comes after the Lebanese government ordered the army to devise plans to disarm the Tehran-backed militant group by the end of the year. Last week, an adviser to Iran's supreme leader had said the Islamic republic was "certainly opposed" to the disarmament plan. Hezbollah has been a key part of Tehran's so-called axis of resistance against Israel, but Iran and its allies have suffered a series of blows. Hezbollah experienced devastating losses, including the death of its leader Sayyed Hassan Nasrallah, over more than a year of hostilities with Israel that ended with a November 2024 ceasefire. A month later, longtime Syrian ruler and Tehran ally Bashar al-Assad was ousted, depriving Hezbollah of its main conduit for weapons and supplies from Iran. And finally, Israel went to war with Iran itself in June, with the United States stepping in briefly to bomb Iranian nuclear facilities. Ever since last year's war, Hezbollah's firm grip on Lebanese politics has been slipping. Hezbollah has slammed the government's new disarmament push as a "grave sin", while Tehran has also declared its opposition. But in Beirut, Larijani said that no foreign power should give orders to Lebanon, adding that it was not Iran but the United States that was intervening. Lebanon's cabinet recently considered a U.S. proposal that included a timetable for Hezbollah's disarmament, with Washington pressing Beirut to take action. "Any decision that the Lebanese government makes in consultation with the resistance is respected by us," Larijani said.
Nahar Net
an hour ago
- Nahar Net
Israel keeps up strikes on south as Lebanon mulls disarming Hezbollah
by Naharnet Newsdesk 14 August 2025, 15:15 An Israeli drone targeted Thursday an excavator in the southern town of Yaroun as Israeli forces infiltrated Wadi Hounin, entering two Lebanese houses near Adeisseh. Israel has kept up its strikes on Lebanon despite a November ceasefire that sought to end over a year of hostilities with Hezbollah, including two months of all-out war. On Wednesday, one person was killed in an Israeli drone strike on his car in the southern town of Haddatha in the Bint Jbeil district. These attacks come amid tensions in Lebanon over Hezbollah disarmament. Israel has warned it will continue to strike until Hezbollah has been disarmed. The Lebanese government meanwhile ordered the army to devise plans to disarm the group, under mounting U.S. pressure.
