November 9, 2017 / 4:10 PM / a year ago

Lebanon crisis sparks fresh sell off in dollar bonds, CDS jump

LONDON, Nov 9 (Reuters) - Lebanon’s sovereign dollar bonds fell across the curve on Thursday and the cost of insuring exposure to its debt rose on as the political crisis engulfing the country deepened.

Lebanon’s 2027 and 2028 dollar bonds nursed the biggest losses, falling nearly 2 cents to multi-year lows, according to Thomson Reuters data.

The cost of insuring exposure to Lebanese debt hit its highest since late 2008, with five-year credit default swaps (CDS) for Lebanon jumping 30 basis points (bps) from Wednesday’s close to 615 bps, according to IHS Markit data.

A top Lebanese official said on Thursday the country believes Saad al-Hariri, who resigned as prime minister on Saturday while in Saudi Arabia, is being held by Riyadh. Meanwhile Saudi Arabia warned its citizens against travel to Lebanon.

“Lebanon seems really stuck between rival sides in the region and given the vulnerability on the fundamental side you start seeing this appear in market perception,” said Simon Quijano-Evans, emerging market strategist at Legal & General Investment Management. (Reporting by Karin Strohecker; editing by Sujata Rao)

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