lebanon debt swap
...he deal -- which involves the issue of $1.265 billion of a bond paying a 7.125 percent coupon and maturing in March 2010 and $275 million of a 7.75 percent bond due in September 2012 -- was just a way of packaging the same problem differently. What Lebanon really needs, they said, is structural reform, including better tax collection, an overhaul of the public sector, some privatisation and less nepotism. "They are trying to push away the inevitable," Middle East Capital Group's Tony Hchaime said. "Eventually they are going to reach a point where they have to repay the debt." "In the long term if they continue the way they are going it's going to crash. The only way to avoid that is to inject a major amount of money into the system to repay the debt." FOREIGNERS CAUTIOUS Lebanon's attempt to handle its debt, which stood at $31.87 billion at the end of June 2004, has relied heavily on local banks which have long been the main consumers of Lebanese government paper. While high liquidity has kept local demand high, analysts say Lebanon's unstable politics and the lack of concrete changes to fiscal policy were keeping foreign investors away. "I don't think any foreigners have even touched this stuff at the moment," said Stephen Bailey-Smith, emerging markets analyst at Idea Global in London. "Locals have to hold on to it or else the whole house of cards falls down, but it hasn't been as well received as the (government) probably hoped.. It's a repackaging. They had to do it, because they are desperate." Lebanon's budget deficit fell to 26.04 percent of spending at the end of July, compared with 37.43 percent in the first seven months of 2003, but analysts said the trend would not be sustainable given rising interest rates and cost of living. Most predicted the government would roll over more debt in the coming months. "It is good in the short term," Sebastien Dessus at the World Bank's Beirut office said. "But in the long run of course they will have to solve the situation, improve their fiscal situation because that's the root of the problem." REFERENCE: http://www.lebanonwire.com/0409/04090106LW.asp We see that the Lebanese government accepted to Swap...