How Lebanese Default Would Play Out: An Investor Conundrum - Bloomberg

How Lebanese Default Would Play Out: An Investor Conundrum - Bloomberg:

For many bond investors it’s a matter of when, not if, Lebanon restructures its $87 billion of debt as it reels under a deepening financial crisis. Working out what the trigger would be or the extent of the fallout is another matter entirely.

After repaying $1.5 billion Eurobonds that matured last month, the focus is turning to whether authorities will honor a $1.2 billion commitment on March 9. Several influential local economists and even some officials say the country should use its dwindling reserves to pay for imports instead of creditors.

Complicating the debate is the Arab nation’s political paralysis since mass protests against corruption forced the prime minister to resign in late October. The country’s debt risk, measured by five year credit-default swaps, climbed above 2,500 basis points last week and is the highest globally after Argentina, according to data compiled by Bloomberg.