QATAR: FINANCIAL SUPPORT TO LEBANON.
Summary: According to Morgan Stanley, the Qatari support of US$500 million was unexpected and should allay investor concerns about near-term debt-servicing in Lebanon.
According to Morgan Stanley, the Qatari support of US$500 million was unexpected and should allay investor concerns about near-term debt-servicing in Lebanon. The report expects Lebanese bond spreads to retrace the widening since January 10, and expects the front end to benefit the most along the curve. It is worth noting that even though the Finance Ministry clarified that its plans do not include any debt restructuring, Lebanese Eurobonds never retraced the entire spread widening. As such, Morgan Stanley expects the eurobond spreads to tighten to at least January 9 levels. According to the report, the 0-5 year part of the Lebanon curve should benefit the most on the back of Qatari support. For bonds further out on the curve, the knee-jerk reaction would likely be positive but the medium-term outlook depends on reform progress in Lebanon.
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