Saudi Press

Saudi Arabia and the world
Sunday, Jul 13, 2025

Rating Agencies Cite ‘Cautious’ Positive Outlook for Lebanon after Maritime Demarcation Deal with Israel

Rating Agencies Cite ‘Cautious’ Positive Outlook for Lebanon after Maritime Demarcation Deal with Israel

The conclusions of two international credit rating agencies agreed on the initial positive outlook for Lebanon and its economy following its signing of the US-mediated sea border deal with Israel.
“The agreement is credit positive for Lebanon because it establishes the necessary geopolitical security conditions for international energy companies to start exploration and the eventual recovery of Lebanon’s hydrocarbon resources,” Moody’s stated in its latest report.

It affirmed that harnessing potential gas resources will help alleviate the country's chronic power deficit and kick-start an economic recovery.

Notwithstanding the improved geopolitical situation, domestic political risk remains pervasive, the agency warned.

“Lebanon's rating is likely to remain unchanged without comprehensive debt restructuring because of the extent of the country's macroeconomic, financial and social challenges and our expectation of very significant losses for private sector creditors in excess of 65%.”

Moody’s further noted that the agreement's final ratification by Lebanon's parliament allows exploration to begin at the Qana prospect on Block 9, a part of which crosses the maritime border's new demarcation line.

The agency said that exploration of the Qana field has yet to confirm any recoverable resources, noting that the recovery of any hydrocarbons in Lebanon would take about three to four years.

According to the report, the deal arrives just as Lebanon's power supply through the loss-making Electricity of Lebanon (EDL) utility is rapidly deteriorating because of its dwindling fuel supply although the government relies now on oil shipments from Iraq and is trying to finalize World Bank financing to begin importing gas from Egypt through the Arab Gas Pipeline.

The agency indicated that Beirut’s capacity to access the World Bank funding hinges on its implementation of reforms, including an audit of the EDL and a shift toward more cost-effective tariffs.

The agency further considered the April 7 International Monetary Fund (IMF) Staff Level Agreement for a $3 billion, four-year Extended Fund Facility (EFF), as an opportunity for Lebanon to gain external support.

The specific reforms required to access the EFF include adopting appropriate legislation on capital controls, bank secrecy and bank resolution, as well as a decision toward unifying the multiple exchange rate systems.

It underlined the slow progress on these reforms since the parliamentary elections in May 2022. “A new government still needs to be formed to succeed the caretaker government of Prime Minister Najib Mikati.”

It stressed that the parliament also has yet to elect a new president to succeed President Michel Aoun, whose term ends on October 31.

Lebanon’s outstanding Eurobonds amount to nearly $31 billion, without calculating the suspended interest, all distributed over annual installments that extend until 2037.

In 2020, then-Prime Minister Hassan Diab said Lebanon will not pay a $1.2 billion Eurobond due on March 9 as its foreign currency reserves have hit critical levels and are needed to meet the basic needs of the Lebanese people.

In a televised address, Diab said Lebanon was not able to pay maturing debt in the “current circumstances” and would work to restructure its debt through negotiations with bondholders.

Therefore, the problem became also linked with completing the final agreement with the IMF.

Meanwhile, Fitch Ratings said the agreement reached on October 11 between Israel and Lebanon could facilitate the development of gas fields in the region and enhance long-term economic prospects for both nations.

The agency pointed out that such benefits could be positive for Lebanon’s credit profile, in combination with a broader reform effort.

Nonetheless, at this stage, it warned that outcomes remain highly uncertain and the deal faces significant implementation risks.

Regarding Qana field, Fitch said the details of the agreement have not been published, but officials’ statements indicate that Lebanon would get full rights over gas exploration and production there.

Israel would be remunerated for its rights to potential Qana reserves via the field’s operator, the agency noted.

It stated that TotalEnergies leads a consortium that was awarded an exploration license in 2018 for blocks 4 and 9, where much of the Qana field lies.

Following the deal, the agency said Lebanon’s caretaker prime minister called for TotalEnergies to begin gas exploration immediately.

It said prospects for gas production remain unclear.

“The Qana field’s reserves are unknown. In 2020, drilling in block 4 did not reveal commercially viable gas volumes.”

It warned that if production is possible, it would take years to launch and the development of an appropriate legal framework could be hampered by Lebanon’s political environment.

Lebanon faces major short- and medium-term challenges in the interim, it noted.

“The IMF’s Board has not yet approved disbursal of a $3 billion EFF as the government has not implemented the prior actions required,” the agency explained.
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Russia Formally Recognizes Taliban Government in Afghanistan
Mediators Edge Closer to Israel-Hamas Ceasefire Agreement
Emirates Airline Expands Market Share with New $20 Million Campaign
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
Iran's Parliament Votes to Suspend Cooperation with Nuclear Watchdog
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
Explosions Rock Doha as Iranian Missiles Target Qatar
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Oman Set to Introduce Personal Income Tax, First in Gulf
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
G7 Leaders Fail to Reach Consensus on Key Global Issues
Mass exodus in Tehran as millions try to flee following Trump’s evacuation order
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Netanyahu Signals Potential Regime Change in Iran
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
Iran Conducts Ballistic Missile Launches Amid Heightened Tensions with Israel
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
×