Lebanon’s government cabinet voted unanimously on Saturday to default on a maturing Eurobond of $1.2 billion that is coming due for payment March 9.
The country last week hired US-based Lazard strategic and financial advisory firm and the Cleary, Gottlieb Steen & Hamilton LLP law firm as advisors.
Prime Minister Hassan Diab made the announcement in a speech to the nation Saturday evening.
The bond is part of a portfolio of some $31 billion in dollar bonds that sources told Reuters on Friday the government will seek to restructure in negotiations with creditors.
It’s the first time Lebanon has defaulted on its sovereign debt, according to Asharq Al-Awsat.
The default on Lebanon’s foreign currency debt marks a new phase in the crisis that has crushed its economy over the past six months, knocking some 40 percent off the value of the local currency and blocking savers from full access to their deposits.
The crisis has also fueled the biggest risk to Lebanon’s stability since the country’s civil war, which lasted from 1975 to 1990.