UPDATE 2-Lebanon speaker Berri calls for Eurobond restructuring

Lebanese Parliament Speaker Nabih Berri said on Wednesday debt restructuring was the best solution for looming Eurobond maturities as the banking association said foreign funds had shown a readiness to negotiate a rescheduling of the debt.

As Lebanon grapples with a deep financial crisis, the government is under growing pressure to decide what to do about its debt repayments, including a $1.2 billion Eurobond due on March 9. Berri's comments were the first by a senior leader publicly urging restructuring and came on the eve of talks between Lebanon and International Monetary Fund experts, who are coming to Beirut to give advice on tackling the economic crisis.

"When it comes to the Eurobond maturities, he sees restructuring the debt as the ideal solution," Ali Bazzi, an MP in Berri's parliamentary bloc, cited him as saying after the bloc's weekly meeting. Berri, head of the Shi'ite Amal movement and an ally of the heavily armed Hezbollah, is one of Lebanon's most influential figures. He was named finance minister in the new cabinet that took office last month.

Banking association chief Salim Sfeir said if the government was heading towards a debt rescheduling this should happen in an orderly way through negotiations with bondholders, "especially investment funds abroad that have so far shown readiness to negotiate". Lebanese banks hold the bulk of the sovereign debt, including $14 billion worth of Eurobonds.

Sfeir spoke after a meeting with Prime Minister Hassan Diab, whose cabinet was formed with the support of Amal, Hezbollah and President Michel Aoun's Free Patriotic Movement, but not Saad al-Hariri, a traditional ally of the West and Gulf Arab states. The IMF team will visit Lebanon from Feb. 20-23 to meet with authorities on economic challenges and provide broad technical advice, Fund spokesman Gerry Rice said on Tuesday.

Lebanon has not requested IMF financial assistance that would come with terms that Berri has said the country would not be able to bear. Lebanon's public debt is equivalent to more than 150% of its GDP. Lebanon will invite eight firms to bid to be its financial adviser as it studies all options on its sovereign debt, a source familiar with the matter said on Wednesday, saying a decision had yet to be taken on how to handle the debt.

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