BEIRUT — Lebanon's Finance Ministry indicated that it has introduced an annex to the contracts linked to eurobonds — the dollar-denominated debt securities issued by the Lebanese state — formalizing the extension of their prescription periods.

The move confirms a pledge made on Monday by newly appointed Finance Minister Yassine Jaber, who said he would not overturn the measure first adopted by Prime Minister Najib Mikati’s caretaker government on Jan. 7.

The announcement came shortly after the Association of Banks in Lebanon (ABL) revealed it was considering legal action against the state to recover eurobond investments held by some Lebanese banks. Banque du Liban (BDL) and foreign funds reportedly hold the majority of the remaining securities, according to information circulated in recent months.

"This annex was signed based on Article 23.1 of the amended and updated agreement dated March 1, 2010," specified the ministry, adding that this clause indeed allows the state to modify the contract, as long as the changes made "do not negatively affect the rights of any bondholders."

The ministry finally claimed that this annex was added to "minimize the risk of being sued by bondholders and to allow for the development and finalization of an orderly restructuring plan" of the debt contracted by Lebanon through these securities, on which it defaulted in March 2020.

The ministry also included a table summarizing the 29 issues due since the one that matured on March 9, 2020. The total amount stands at 31.314 billion dollars, issued between March 9, 2010, and Nov. 27, 2019, a period when the crisis was beginning to take shape in Lebanon.

On that day, Lebanon made two issuances of 1.5 billion dollars each, just after having repaid two other issues of the same amount. At the time, the authorities announced that the interest rates granted would be 1 percent, but the table published by the ministry indicates that their remuneration is actually at 11.5 percent and 12 percent, respectively. The maturities of these two issuances (Nov. 27, 2029, and July 27, 2035) are not the most distant. The issuance of 750 million dollars made on March 23, 2017, has a maturity set for March 23, 2037.

According to market information, the average price of eurobonds reached 18.2 cents for a dollar on Tuesday evening. Although low, the price has increased since the election of President Joseph Aoun and the appointment of Prime Minister Nawaf Salam. The uptick reflects investors' and speculators' hopes that nearly five years after Lebanon’s default, the state will restructure its dollar-denominated debt and repay it at a value higher than its current price on the secondary market, where it is traded.

This article was originally published in French in L'Orient Le-Jour.

Le ministère des Finances modifie les contrats des eurobonds et publie le récapitulatif des séries émises