BEIRUT (Reuters) – Lebanon has approved U.S. investment bank Lazard LAZ.N to be its financial adviser on debt restructuring, a government source said on Tuesday, as the heavily indebted state faces a major financial crisis.
At a cabinet meeting on Tuesday, law firm Cleary Gottlieb Steen & Hamilton LLP was also approved to act as the government’s legal adviser, the source said.
Lazard’s recent restructuring work has included major retailers such as Neiman Marcus, which reached an agreement last March to extend the maturities of more than $2.5 billion of its debt, and Forever 21, which filed for Chapter 11 bankruptcy last September.
Lebanon is in the grip of a suffocating financial crisis. A shortage of foreign currency liquidity forced banks to impose strict restrictions on access to hard currency and overseas transfers, and the Lebanese pound plummeted.
One of Lebanon’s most influential leaders, parliament speaker Nabih Berri, said last week that debt restructuring was the best solution for the impending Eurobond maturities, which include a €1 eurobond. $.2 billion due March 9.
S&P last week downgraded Lebanon’s sovereign rating following the expected debt restructuring. Moody’s also downgraded Lebanon’s rating, saying the rating reflected expectations that private creditors were likely to suffer substantial losses in any debt restructuring.
Fitch also said Lebanon’s financial position pointed to debt restructuring.
(Corrects reference to Lazard)
Reporting by Samia Nakhoul; Written by Tom Perry; Editing by Samia Nakhoul and Alex Richardson