LONDON (Reuters) – Lebanon’s banks are ready to talk with the country’s foreign creditors as the government seeks to restructure its debt, a source familiar with the matter said on Saturday.

Houlihan Lokey has been appointed financial adviser by the Association of Banks in Lebanon to help with the process, the source said.

Lebanon announced on Saturday that it cannot meet its debt payments and halted a March 9 bond payment of $1.2 billion, setting the heavily indebted state on course for a sovereign default as it grapples with a financial crisis.

Lebanon’s banks are among the largest holders of its $31 billion in bonds and will be key to any overhaul of the debt.

Prime Minister Hassan Diab said on Saturday that Lebanon would try to restructure its debt through negotiations with bondholders.

“Our group will be constructive and supportive of a consensual restructuring and looking out for the interests of our depositors,” the source said, adding that there was an expectation that foreign creditors would also be seeking a consensual approach rather than to pursue litigation.

There was no timetable yet for any restructuring and the discussions with foreign creditors are likely to start slowly, the source added.

A set of Lebanon’s bond holders, including international distressed debt firms, are to step up efforts to form a creditor group in the coming days, one of the members of the group told Reuters on Saturday.

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