S&P Global Ratings lowered its foreign-currency sovereign ratings on Lebanon to selective default, or SD/SD, from CC/C after the country decided to suspend payments for its commercial foreign-currency debt obligations, including a $1.2 billion eurobond due March 9.

The Lebanese government reached its decision after facing funding pressures, social and political protests, and opposition to debt repayment. The country said it plans to restructure the debt despite having a seven-day grace period on the matured eurobond. Lebanon's total outstanding eurobonds stand at about $31 billion, with other short-term maturities of $700 million in April and $600 million in June, S&P said.

The rating agency also affirmed Lebanon's local-currency ratings at CC/C, with a negative outlook on the long-term rating. The negative outlook indicated the risk to commercial debt repayment in light of the ongoing political, financial and monetary troubles in the country, according to the report

The Lebanese government, led by Prime Minister Hasan Diab, is expected to enter into negotiations with creditors over the coming months to explore options for its debt obligations, which could include trimming principal and coupon payments, and extending maturities. S&P said it would likely remove the foreign-currency ratings from SD once any debt exchange or restructuring became effective.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.