BEIRUT, Nov 9 (Reuters) - Lebanon had been considering issuing a Eurobond this month but would likely postpone it after the country plunged into a political crisis following the resignation of the prime minister on Saturday, a Ministry of Finance official told Reuters.
The official, who has knowledge of the matter, said now was not the right time to go to market and there was no urgency to make an issue and they would wait and see how things develop.
Another ministry official said the ministry was considering a possible issue this month but would not be drawn on whether it would now be delayed.
Neither official gave any details of the value of the Eurobond, which Lebanon usually issues denominated in dollars.
The first official said Lebanon had already secured financing for 2017 earlier in the year, but the Ministry of Finance and the central bank had been planning the new issue for liability management and to support foreign currency reserves.
Saad al-Hariri’s resignation pitched Lebanon into a deep crisis and pushed the country back to the forefront of a regional struggle between Saudi Arabia and Iran.
Lebanon believes Hariri is held in Saudi Arabia, from where he resigned, and plans to work with foreign states to secure his return, two top Lebanese government officials said.
Lebanon’s crisis caused a sell-off in its dollar-denominated bonds this week.
The cost of insuring exposure to Lebanese debt on Thursday hit its highest since late 2008, with five-year credit default swaps (CDS) for Lebanon jumping 30 basis points (bps) from Wednesday’s close to 615 bps, according to IHS Markit data.
Lebanon’s central bank has to maintain adequate foreign reserves to keep the currency pegged at 1,507.5 Lebanese pounds to the dollar.
With revenues and growth low, the country relies for those foreign reserves on deposits made in local banks by millions of expatriate Lebanese. The banks buy government debt, which finances an expanding budget deficit and debt.
Lebanese policymakers and bankers say there is no concern for the Lebanese pound - which has been pegged against the U.S. dollar at the same rate for two decades - thanks to record levels of foreign currency reserves. (Reporting by Lisa Barrington; Editing by Alison Williams)