Goldman Sachs Asks What If #Lebanon Is Forced to Restructure Debt - Bloomberg

Goldman Sachs Asks What If Lebanon Is Forced to Restructure Debt - Bloomberg:

Goldman Sachs Group Inc. still sees an imminent debt restructuring in Lebanon as unlikely but is already turning its attention to how much investors could recover as one of the world’s most indebted countries teeters on the brink of financial crisis.

Under Goldman’s base scenario, foreign investors would recover 35 cents on the dollar, Farouk Soussa, an economist at Goldman Sachs, said in a report. But he said any debt overhaul would put the country’s banks first, meaning “the actual recovery value” would be significantly different to contain damage. Local lenders are among the biggest holders of Lebanon’s sovereign debt.

Political turmoil and sluggish economic growth are prompting questions on how long Lebanon can avoid a financial meltdown that would further destabilize an area rattled by war in Syria and tension between Israel and Hezbollah. Lebanon’s sovereign debt risk surged 280 basis points over the past year to 800, making it the world’s third-worst performing among credit default swaps tracked by Bloomberg.