The dollar-denominated bond, rated B- by Standard & Poor's and Fitch and B3e by Moody's, will be used to cover old debt maturing this year, sources from the finance ministry said.

With the banks total assets far exceeding the entire gross domestic product of the country, local banks hold the bulk of Lebanon's $36 billion public debt and have snapped up the last few issues.

However, some traders had suggested Lebanon was better off delaying this issue to avoid uncertainty over the outcome of a UN inquiry into the February killing of former Prime Minister Rafik Al Hariri, which plunged the country into financial crisis.