Place de l'Étoile, in downtown Beirut, where the Parliament and the Grand Serail are located. (Credit: L'Orient Today)
BEIRUT — The Ad Hoc Group, made up of foreign companies holding Lebanese eurobonds, told the global financial intelligence platform Octus on Thursday that they will “oppose any preferential treatment offered to large depositors or shareholders of Lebanon’s insolvent banks to the detriment of bondholders, and that they support the protection of small deposit accounts in the upcoming restructuring of the financial sector.
Represented by law firm White & Case and investment bank Houlihan Lokey, the group has a steering committee of eleven members, including Aberdeen Investments, Amundi, BlackRock, RBC BlueBay, GMO, Greylock Capital, Mangart Capital, Mesarete Capital and Morgan Stanley Investment Management. Lazard and Cleary Gottlieb are advising the Lebanese government.
“We in the group draw attention to the large deposit accounts that yielded very high rates in a global low-rate environment,” said David-Alexandre Gadmer, head of Sovereign Advisory and managing director in Houlihan Lokey's Financial Restructuring Group. “Investors in these large deposit accounts took comparable market risk to that undertaken by eurobond investors. As such, it is very important that the two categories of claims receive commensurate treatment.”
“The idea that the state should take on the full burden is nonsensical,” he continued. “First, the state simply doesn’t have the capacity to do so. Then, it would also be unfair to bail out some people while letting the entire population bear the cost and burdening the economic recovery of the country.”
Lebanon defaulted on its sovereign debt in March 2020 and has failed to engage in meaningful debt restructuring talks with bondholders since. The statute of limited period under the bonds was extended till March 2028 in January, while Lebanon’s battered bonds are now quoted at 17 cents to the dollar.
