Qatar Starts to Make Good on $500 Million Bond Pledge to Lebanon

(Bloomberg) -- Qatar has bought some bonds in a planned $500 million investment in Lebanese debt and remains committed to completing its pledge, according to a Qatari government official.

The gas-rich country intends to make the rest of the investment as announced in January, the official said, without providing a time line to complete the deal. The official asked not be identified because the information isn't public. Lebanon's dollar bonds rallied on Friday, lowering the yield by the most in a week.

Lebanon, one of the world's most indebted nations that spends almost half its fiscal revenue just on interest payments, has been seeking funds from other countries for months after Qatar made its pledge.

On Tuesday, Lebanese central bank Governor Riad Salameh said that, to his knowledge, Qatar had yet to purchase the country's debt.

Read: Lebanon's Debt Fix Hinges on Central Bank After Lenders Balk

The country has relied on commercial lenders and the central bank to keep its finances afloat. With at least three times as many Lebanese living abroad than at home, the economy has been sustained by remittances, mainly from Gulf Arab countries and Africa, which banks then use to buy government debt.

Lebanon's dollar notes due in April 2021 rose for a second day on Friday, cutting the yield by 21 basis points to 12.06%.

Qatar is the world's biggest exporter of liquefied natural gas and controls a $320 billion sovereign wealth fund. Saudi Arabia, one of Lebanon's closest allies, cut diplomatic and trade ties with Qatar in 2017. Qatar has sought new friends and business partners since then, and allowed visa-free travel for Lebanese citizens.

Qatar is committed to strengthening ties with Lebanon, the Qatari official said.

To contact the reporter on this story: Mohammed Aly Sergie in Dubai at msergie@bloomberg.net

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, ;Lin Noueihed at lnoueihed@bloomberg.net, Paul Abelsky, Bruce Stanley

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