Lebanon bonds rally to near-5-year high with new government

• Sharp turnaround extended
• Highest level in five years
• Financial reforms prioritised

Lebanon’s international bonds rallied more than one cent on Monday, two days after a new government was formed.

The country’s dollar-denominated bonds jumped 1.1 cents to being bid at around 18.3 cents across most maturities, the highest level since March 2020, Tradeweb data showed.

The latest rise extends a sharp turnaround for the bonds, which have lingered at deeply distressed levels of around 5 cents for much of the past three years, but have more than doubled since Hezbollah and Israel agreed a ceasefire in November.

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However analysts said progress on restructuring Lebanon’s international bonds, which have been in default since spring 2020, might still be some time off.

Discussion on debt restructuring “might still be far away, moreover as the rebuilding and reconstruction exercise will need to be the priority,” JP Morgan analysts said in a note to clients dated Saturday.

On Saturday Lebanon’s new prime minister Nawaf Salam said that the 24-member cabinet would prioritise financial reforms, reconstruction and implementing a UN resolution that is seen as a cornerstone to stability on Lebanon’s border with Israel.