Lebanon Will Default on Foreign Debt Payment Amid Deepening Economic Crisis
The Government of Lebanon announced it will default on $1.2 bn payment on Monday 9/3/20. The decision reflects the economic and political turmoil the country finds itself in. Hassan Diab – the newly appointed Prime Minister- said that foreign currency reserves have fallen to “a worrying and dangerous level which pushes the Lebanese government to suspend payment of the 9 March Eurobond maturity because of a need for these funds.”
The Lebanese government will seek to restructure the debt, however due to political issues at home, high corruption and tighter liquidity for emerging market. In this specific environment the use of Deriveum as a new collateral type to backstop CDS would be especially beneficial for investors.
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