S&P downgrades Lebanon bonds to default

S& P says recent explosion in Beirut is deepening country’s economic crisis

WASHINGTON:

Credit ratings agency S&P on Friday downgraded more Lebanese government debt issues after missed payments, citing the country’s worsening economic crisis following the devastating explosion in Beirut earlier this month.

S&P Global Ratings maintained the “selective default” or “SD” rating for Lebanon’s foreign debt, after the country first defaulted in March, but three more bonds were cut to “D” from “CC,” the agency said.

“The recent catastrophic explosion in Beirut is deepening the country’s economic crisis,” S&P said in a statement. “A protracted political vacuum or weak new government could further delay policy reforms, external aid and debt restructuring negotiations.”

The capital was ravaged by a massive explosion at Beirut’s port on August 4 that killed 181 people and wounded thousands. That was followed by protests against the government, leading the cabinet to resign.

Still reeling from the deadly blast, the country also entered into a new coronavirus lockdown on Friday after a string of record daily infections tallies.

“Even before these recent events, Lebanon had made limited progress in engaging creditors on debt restructuring negotiations,” S&P said.

The International Monetary Fund (IMF) has been working with the government to try to reach an agreement on a new aid programme that could undergird a debt restructuring and unlock billions more in aid.

Published in The Express Tribune, August 23^rd, 2020.

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