LONDON, June 8 (IFR) - The Republic of Lebanon plans to use its own foreign exchange reserves to repay US$1bn of bonds due in June and August, according to a treasury source.
“We have cash for the upcoming maturities,” the source said.
Under Lebanon’s existing budget laws, the sovereign cannot print anymore new debt this fiscal year.
However, refinancing outstanding debt by exchanging old bonds for new would not contravene the law, leaving the possibility of a debt exchange open, said the source.
Lebanon has not contacted international banks with a request for proposals for a new deal.
The treasury could look to raise new dollar-denominated debt towards the end of this year, if the government passes a new law allowing the sovereign to print more bonds, the source said.
“We need parliament to convene...if we want to issue,” the source added.
Lebanon has a US$500m 4.10% bond due on June 12 and a US$500m 8.50% note due on August 6.
In its Article IV review of Lebanon in July 2014, the IMF forecast the country would have US$35bn of gross reserves in 2014 and US$36.3bn in 2015.
Lebanon is rated B2 by Moody‘s, B- by Standard & Poor’s and B by Fitch.
Reporting By Michael Turner; editing by Sudip Roy