Moody's Agency for Investors Service dropped Lebanon's sovereign debt rating from B3 to Caa1. Moody's decision to downgrade the ratings reflects the increased risks to liquidity and financial stability that could lead to debt restructuring or other measures that may be constrained by agency ratings.
Moody's predicted that the government could contain or reverse the high debt burden and interest burden as domestic and external financing conditions worsened or might seek to enhance debt sustainability, saying that the continued delay in forming the government would increase the pressure on Lebanon.
According to the agency, defaulting may be avoided if a new government - when it is formed - takes some financial consolidation measures that unleash the funds package of Cedar Conference.
Moody's also lowered the long-term foreign currency ceiling to B2 from B1, the ceiling of deposits to Caa1 from B3 and local currency bonds and the ceilings deposited to Ba3 from Ba2.
Lebanon's total funding needs exceed 30 percent of GDP, which is one of the highest sovereign rates, according to the agency.
Source: (Al-Arabi Al-Jadeed newspaper, Edited)
