Lebanon probing local banks’ sale of Eurobonds: Judicial source

Lebanon is probing the sale of Eurobonds by local banks to foreign investors, including Ashmore Group, a judicial source said on Wednesday.

The source said authorities were “gathering information as to why this happened,” though the practice is not illegal.

As heavily indebted Lebanon battles a crippling financial crisis, the government is under growing pressure to decide what to do about its repayments, including a $1.2 billion Eurobond due on March 9.

Local lenders sold around $500 million of the March notes to emerging markets specialist Ashmore, which holds blocking stakes in some of the shortest-term bonds, the judicial source said.

London-based Ashmore has declined to comment on its position on Lebanon.

Parliament Speaker Nabih Berri said on Wednesday that debt restructuring was the best solution for looming Eurobond maturities, while the banking association said foreign investors had shown a readiness to negotiate a debt rescheduling.

Berri’s comments were the first by a senior official urging restructuring and came on the eve of talks between Lebanon and International Monetary Fund experts.

Local banks hold the bulk of the sovereign debt, including $14 billion in Eurobonds.

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Lebanon’s dollar-denominated bonds maturing next month plunged 17 cents on the dollar on Wednesday for their worst day on record.

The country has a total of $2.5 billion of foreign currency debt maturing this year.

Another judicial source said that at the request of the justice minister, a public prosecutor had asked the central bank to provide details on the recent Eurobond sales.