Fitch Ratings Withdraws Categorization of Lebanon Due to Lack of Key Data
In a significant move, Fitch Ratings has decided to withdraw from categorizing Lebanon due to the unavailability of certain key data necessary for maintaining an accurate assessment of the nation.
Lebanon’s Long-Term Debt Ratings Affirmed as Restricted
The global credit rating agency has affirmed Lebanon’s long-term foreign and local-currency issuer default ratings as restricted, leading to the withdrawal of the nation’s IDR and country ceiling.
Impact of Restricted Default on Lebanon’s Financial Obligations
Restricted default indicates that Lebanon has neglected specific financial obligations while still meeting others, resulting in the agency ceasing to provide assessments and analysis for the country due to insufficient data.
Default on Foreign-Currency Obligations Since March 2020
Lebanon has been in default on its foreign-currency obligations since March 2020, particularly due to the government’s failure to repay the Eurobond that was due on March 9, 2020.
Government’s Decision Leads to Cessation of Ratings
The government’s decision to stop servicing outstanding Eurobonds pending debt restructuring has directly impacted Lebanon’s rating assessment, resulting in Fitch withdrawing the nation’s ratings.
Impact on Local-Currency IDRs
The local-currency IDRs remain in restricted default due to the government’s failure to resume interest payments on Banque du Liban’s holdings of local-currency securities, despite continuing to serve local-currency debt to private creditors.
Lack of Up-to-Date Financial Information
Fitch’s decision to withdraw Lebanon’s ratings was primarily driven by the issuer’s cessation of publishing national accounts and fiscal data, which are only available up to 2021, making it impossible for the agency to maintain accurate ratings.
Environmental, Social, and Governance Relevance Score
Lebanon’s environmental, social, and governance relevance score for political stability, rights, rule of law, institutional quality, and corruption control stands at five, reflecting the high impact of the World Bank Governance Indicators in Fitch’s Sovereign Rating Model.
Low WBGI Ranking and Challenges Faced by Lebanon
Lebanon’s low WBGI ranking at 14.8 highlights the challenges faced by the country, including weak institutional capacity, uneven rule of law application, and high levels of corruption, according to Fitch Ratings.