This mechanism, explained "Lebanon is very close to its obligation which is due in March and there is not enough time to go to the IMF to put a clear program for reforms that allows Lebanon to reschedule its debt," Ghobril said. A eurobond is a domestically issued bond held in a non-native currency. Lebanon’s banking sector on the precipice. in Lebanon to be severe; economies which experience debt, currency, and banking crises simultaneously contract by about 8% before they recover. A default on debt will have far-reaching and long-lasting effects on Lebanon, and with no decision in sight on how authorities will handle the debt liability, many have asked the question as to what will happen next. In Lebanon’s case, as the country faces an unprecedented economic and political crisis, if it fails to repay its creditors, the bondholders, on March 9 it will default. "The difference between the actual spread of 445 basis points on Lebanon's Eurobonds and the Goldman Sachs' model-implied spread of 355 bps shows that the undervaluation is at 90 bps," the Byblos Bank report explained. For one, a progressive haircut is required. But the banks, holding that the state is solely responsible for the crisis and should deal with the consequences, took the lead. Lebanon's Finance Ministry has designated Barclays, Byblos Bank, Societe Generale de Banque au Liban and JPMorgan to co-manage the issuance of $1.5 billion in eurobonds to finance the public debt. 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Lebanon is in the midst of a dangerous multifaceted crisis: an economic, financial, and socio-political one. In the event of a default, credit ratings agencies have already indicated there would be a further downgrade of the country. However, the virus did add some interesting dynamics. In addition to $31 billion of those, the Middle Eastern nation’s central bank has $52.5 billion of obligations in the form of foreign-currency deposits and certificates of deposit. "The Lebanese state will seek to restructure its debts, in a manner consistent with the national interest" through negotiations with creditors, Diab said in a live address. "The difference between the actual spread of 485 bps on Lebanon's Eurobonds and the Goldman Sachs' model-implied spread of 376 bps shows that the undervaluation is at 109 bps," the report said. Euroyen and eurodollar bonds, for example, are denominated in Japanese yen and U.S. dollars, respectively. Excessive fiscal and external imbalances, financed through debt for decades under a fixed exchange rate regime, weakened the balance sheets of the sovereign, banks and the central bank, and led to a sudden stop of capital that precipitated a debt, banking and currency crisis. Introduction. Those who have deposits of over $1 million at a bank could receive a haircut of 50 percent, for instance. Parliament Speaker Nabih Berri rejected the payment of maturities on Lebanon’s foreign-currency debt, MP Ali Bazzi said Wednesday. ... “Foreign reserves excluding gold is around $38 billion including Eurobonds,” he revealed. The state issues the Eurobonds and not BDL,” the source explained. Crisis-hit Lebanon’s government has to decide whether it should restructure or pay its $2.5 billion Eurobonds, including a $1.2 billion Eurobond maturing in March, $600 million maturing in April, and $700 million in June. Explained Lebanon has never defaulted on the Eurobond the `` euro '' in is... 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