Fitch Ratings confirms Lebanon's 'Restricted Default' status and withdraws ratings

On Tuesday, the American credit rating agency, Fitch Ratings, confirmed Lebanon's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) at "Restricted Default" (RD). 

In a release, Fitch affirmed that it "has subsequently withdrawn Lebanon's IDRs and Country Ceiling."

Additionally, the credit rating agency stated that it is "withdrawing Lebanon's ratings," as the agency "no longer has sufficient information to maintain the ratings due to the unavailability of certain key data."

Therefore, Fitch would stop providing ratings, or analytical coverage, for Lebanon. "These ratings are unsolicited and the issuer has no obligation to provide information," it added. 

In the release, Fitch Ratings assured that "Lebanon remains in default on its long-term foreign-currency government bonds, following the sovereign's failure to pay the principal on the Eurobond that matured on 9 March 2020."

"The affirmation of the Local-Currency IDRs at 'RD' reflects that the government has not resumed interest payment on Banque Du Liban's (BDL) holdings of local-currency securities issued by the government. Local-currency debt to private creditors is still being serviced. Authorities have not requested a local-currency debt restructuring," it added. 

Meanwhile, the agency noted that Lebanon holds an ESG Relevance Score (RS) of "5" for Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality, and Control of Corruption. 

"Lebanon has a low [World Bank Governance Indicators] WBGI ranking at 14.8, reflecting the absence of a recent track record of peaceful political transitions, relatively weak rights for participation in the political process, weak institutional capacity, uneven application of the rule of law and a high level of corruption," the release affirmed. 

Fitch Ratings also reported that the country "has an ESG Relevance Score of '5' for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a key rating driver for Lebanon."