These are uncertain times in global markets. So one might have expected a certain reticence from investors when a recently downgraded sovereign, which is unable to elect a president and has ISIS pushing at its borders, tried to launch its biggest-ever bond. In fact, it flew out the door.
On February 23, the Lebanese Republic launched $1.4 billion of 15-year bonds and $800 million of 10-year paper. It did so at 6.65% on the longer-dated tranche, 6.2% on the shorter. That’s no mean feat.
“If you look at Ghana as a comparable – it has the same credit rating and similar fiscal and structural weaknesses – well, Ghana doesn’t have to deal with ISIS or Hizbollah, yet it is trading at 9% to 10%,” says Nicholas Samara, in emerging markets debt capital markets at Citi, one of the joint bookrunners alongside Blom Bank and Société Générale de Banque au Liban.
In fact, the presence of ISIS and Hizbollah, and the consequent fraught relations with neighbouring Israel, isn’t the half of it.
Lebanon has had to absorb more than 1 million refugees from war-torn Syria, an extraordinary drain on a country whose population is just 4.4
