S&P Global Ratings affirmed at 'SD/SD' (Selective Default) Lebanon's long- and short-term foreign currency sovereign credit ratings, and kept at 'CC/C' the country's long- and short-term local currency ratings, with a 'negative' outlook. The foreign-currency sovereign credit ratings of 'SD/SD' are 12 notches below investment grade. The agency also affirmed at 'CC' Lebanon's Transfer & Convertibility Assessment. In addition, it revised from 'SD' to 'D' (Default) the issue ratings on the May 2022, 2023 and 2029 Eurobonds, as well as on the June 2025 bonds, the October 2022 Eurobond, the November 2024, 2026, 2028 and 2035 bonds, and the December 2024 Eurobond, due to missed coupons payments that were due in May and June.  

The agency indicated that the 'negative' outlook on the local currency ratings and on the associated ratings reflect its expectation that the government will likely restructure its local currency debt as part of a broader debt restructuring program.

S&P indicated that, since the Lebanese government announced the suspension of payments on its external debt in March 2020, it has made limited progress in engaging with creditors on debt-restructuring negotiations. As such, it expected the negotiations to extend beyond 2020 in the absence of a comprehensive restructuring plan backed by all major political parties, as well as by external support. It considered that the authorities' challenges are exacerbated by the coronavirus pandemic that has further weighed on the country's already weak economic activity and severe external, fiscal, and financial pressures.

In addition, S&P considered that the peg of the Lebanese pound to the US dollar is "faltering", amid sustained foreign currency shortages and a widening gap between the official and parallel exchange rates. It also said that Banque du Liban's new regulations suggest a move toward a dual or multiple exchange rate regime.