The New York Post is displayed in the window of a newsstand inside the Trump Tower in New York on Nov. 6, 2024. (Credit: David Dee Delgado/AFP)
The BLOM Bond Index (BBI), which tracks the movement of Lebanese Eurobonds, the country's dollar-denominated state bonds, slightly declined this week (-0.4%), following last Tuesday's election of Donald Trump as the President of the United States. The value of the index stands at 6.97 points. BlomInvest attributes the drop to the fact that "some analysts fear that Donald Trump's accession to the U.S. presidency could further escalate the war in Lebanon."
According to Marwan Barakat, Director of the Economic Department at Bank Audi, the average price of Eurobonds on the secondary market closed on Friday at 8.25 cents per dollar, lower than the 8.75 cents seen in October but still above the range of 6 to 7 cents where it had been trading for a long time since the government defaulted on payments in March 2020, a few months after the onset of the crisis at the end of 2019. The nominal value of Eurobonds exceeds $30 billion, and these bonds have experienced a more than 90% depreciation, now traded only among holders on the secondary market.
Lebanon, currently suffering the devastating effects of the war between Israel and Hezbollah, has yet to begin restructuring its debt with its creditors, which include banks that are virtually bankrupt and foreign investors, including major international banks. The prescription period for interest owed on the bonds that matured at the time of the default is five years.
Hochstein Expected in Beirut
The rise in Eurobond prices in October was driven by positive positions taken by some investors who bet on a positive change after the severe blows Israel dealt to Hezbollah in late September, including the assassination of Hezbollah's Secretary-General Hassan Nasrallah in an airstrike in southern Beirut.
In its analysis of the index's movement, BLOM Bank’s subsidiary observes that while Trump did not start any new wars during his previous term, which ended in early 2021, the Republican candidate "escalated existing conflicts in countries like Afghanistan and Yemen." Pointing out that in his victory speech, Trump promised to "end the wars," the bank highlights that the war in Lebanon began under Joe Biden’s presidency, which will not end until early January, raising doubts about the possibility of a swift end to the hostilities.
According to our newspaper’s information, Amos Hochstein, President Biden's envoy, is expected in Beirut next week to try to revive the negotiations for a cease-fire, at a time when Israel seems prepared to expand its offensive in southern Lebanon and the Bekaa Valley.
The outgoing U.S. administration has intensified its diplomatic efforts on Friday to reach agreements that would end Israel's conflicts in Gaza and Lebanon, with Secretary of State Antony Blinken holding talks with his counterparts from the United Arab Emirates and Saudi Arabia.
