Lebanese Eurobonds, inevitable default or trade of a lifetime

Lebanese Eurobonds are trading at yields-to-maturity touching 80%, and these are the ones due in April 2020. Credit Default Swap levels have hit 5000 bps, up from the already ludicrous 1,500 level only a few weeks ago. Clearly, market participants have priced in a default, with metaphysical certitude, on all bonds maturing after the ones supposed to pay off this month. Even Lebanese government officials have stated (then recanted) on multiple occasions that they will restructure, reschedule, postpone, and other euphemistic terms that confirm this view. According to the journalist who first broke the rescheduling statement in a local paper, the minister who announced it was reading from a document, i.e. while not inevitable, this is most certainly an option being seriously considered at the highest echelons of government. So, if the smartest people in the room, as well as the insiders, are telling you that they’ll default, should we end this article right here and move on to look at the safer Venezuelan or Argentinian Bonds for our distressed debt play?Let’s look at the numbers. The eurobonds outstanding are $29.8 billion. We know that $16 billion are held by Lebanese banks and another $3 billion by the Central Bank of...