Lebanese Eurobonds Slide as Banks Had Reservations About the Deposit Recovery Law Draft

The BLOM Bond Index (BBI), which tracks Lebanese government Eurobonds (excluding coupon payments), fell by 1.19% in the week ending December 18, 2025, to 24.31 points. The drop followed the reservations voiced by the Association of Banks in Lebanon (ABL) on the latest draft on the “Financial Regularization & Deposit Recovery” Law (commonly referred to as the Financial Gap Law), as it shows banks are expected under the plan to bear most of the losses alongside depositors. For further details on ABL’s stance, see: ABL: Proposed Deposit Recovery Law Carries Serious Flaws. The IMF has also raised concerns over the draft, highlighting additional challenges to its passage in cabinet and pointing to ongoing tensions between the central bank and the Fund. The draft is set to be discussed in the cabinet later today. The passage of this law remains a prerequisite for securing an IMF agreement to restructure Lebanon’s debt.

U.S. Treasury yields fell this week as softer inflation data and rising unemployment signaled easing price pressures and labor market strain. Investors are now betting slightly more heavily on a Fed rate cut in January 2026 than a week ago.

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