The credit rating agency, Fitch Ratings, has maintained Lebanon’s rating at “restricted default” (RD) on its long-term foreign currency public debt, as a result of the default on the Eurobonds due March 9, 2020.
On Tuesday, the American International Financial Rating Agency maintained Lebanon’s rating at RD, indicating Lebanon’s ongoing inability to repay its debts.
In the statement, Fitch Ratings assured that “Lebanon remains in default on its long-term foreign currency government bonds, following the default, of Eurobonds, amounting to $1.2 billion in March 2020.”
The “Restricted Default” (RD) rating is given to an entity when it defaults on one or more financial covenants but continues to honor other financial obligations.
Fitch highlights that the RD reflects the government’s failure to resume interest payments on the Banque du Liban’s (BDL) holdings of government-issued local currency securities.
In addition, according to Fitch, Lebanon has a low WBGI (World Bank Governance Indicators) ranking of 14.8, reflecting the absence of a recent history of peaceful political transitions, relatively weak rights of participation in the political process, weak institutional capacity, uneven application of the rule of law and high levels of corruption.
Furthermore, the rating agency revealed that it would “withdraw ratings for Lebanon” because it “no longer has sufficient information to maintain ratings due to the unavailability of certain key data.”
As a result, Fitch would cease to provide ratings or analytical coverage for Lebanon. “These ratings are unsolicited and the issuer has no obligation to provide information,” the agency maintains.
