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Lebanon may refinance some debt in 2010 if mkt allows

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BEIRUT, Dec 3 (Reuters) - Lebanon may seek to borrow next year to help service existing debt and might also seek to refinance some debts due in 2010 to benefit from low interest rates, Finance Minister Raya Haffar al-Hassan said on Thursday.

“We are benefiting from very low interest rates today. We have next year’s challenges and we may have at some point to go to the market and borrow,” Hassan told reporters.

“There has been a swap before and the atmosphere is suitable for us to maybe refinance some of the debts due in 2010. We have to look and see how the market situation is but for sure it seems that we can (do this) to ease the burden of the debt,” she said.

Hassan did not specify whether the debts due were loans or a Eurobond.

Lebanon issued a $500 million two-tranche bond earlier this week which Hassan said had “outstanding results”.

“This time there was a strong demand from foreign companies,” she said.

Lebanon, one of the most heavily indebted states in the world, completed a debt swap in March for around $2.3 billion of foreign currency paper maturing this year.

Strong economic growth has helped reduce Lebanon’s ratio of debt to gross domestic product to 153 percent in June from around 180 percent three years ago. The country’s gross debt stands at $48 billion.

“I suspect what they are doing is one of the usual debt exchanges--- they invite holders of maturing bonds to go into longer maturity issues. It is purely voluntary,” said Fitch Ratings Middle East analyst Richard Fox in London.

“It is a debt management operation which they have done in the past,” he added.

The International Monetary Fund (IMF) has said Lebanon’s economy could grow by around 7 percent this year.

Pitched into crises by assassinations, war and political instability since 2005, Lebanon has enjoyed relative calm for more than a year. It held a peaceful parliamentary election in June and businessman Saad al-Hariri formed a new unity government last month which is expected to pass a vote of confidence in parliament next week.

International donors which had tied aid to progress in such reforms have in turn withheld grants and loans. They pledged some $7.6 billion to Lebanon at a Paris conference in 2007. (Addtional reporting by Sujata Rao; writing by Mariam Karouny; Editing by Ruth Pitchford and Toby Chopra) ((; Reuters Messaging:; Beirut newsroom:+9611 983 885))