Global Investment Bank Morgan Stanley indicated that the Lebanese sovereign has ample foreign currency reserves to meet its near-term foreign currency financing requirements, and is willing to service its foreign currency denominated debt. It added that a credit event in the near term is not part of its baseline scenario for Lebanon due to multiple reasons. First, it said that domestic banks held $16.1bn worth of Lebanese Eurobonds as at the end of November, compared to their aggregate equity position of $20.2bn. In this context, it pointed out that it is not in the interest of the government to re-profile its Eurobonds, given the banks' large holdings of this instrument. It considered that the Lebanese government can refinance its domestic debt without affecting the banks' capital position. Second, it noted that Banque du Liban's assets in foreign currency stand at $39.7bn, which, in the absence of significant deposit outflows, are sufficient to service the current account deficit estimated at $13.2bn and foreign currency debt redemptions of $2.9bn in 2019. Third, it considered that the Minister of Finance's statements about fiscal challenges in the country are directed towards local political parties and aim to put pressure for the formation of a new government. It added that the current caretaker government has limited decision-making powers and that any key decision about Lebanon's debt profile would have to wait until the formation of a new government. Overall, it considered that the main pressure on Lebanon's ability to service its debt under a "tail-risk scenario" would come from deposit outflows. But it did not expect such a scenario to materialize in the near term, given continued deposit inflows, including an estimated rise in resident deposits of $880m in December, and the lengthening in the average maturity of deposits.