Regional investors in a fund co-managed by Beirut-based Capital Investment Services (CIS) and London-based Royal Bank of Canada Investment Management (RBCIM) are opting to keep all their money in Lebanon for the moment because of high yields on government securities, rather than investing abroad as envisaged when the fund was set up.

The International Lebanese Investment Account, a discretionary account, was launched in December with the target of raising $25 million, mainly from Lebanese and other Arab investors. RBCIM was to place 85 per cent of the money raised in global securities with the other 15 per cent invested by CIS in Lebanon (MEED 17:11:95). But so far, none of the funds raised have been passed on to Royal Bank, a bank source said.

'Until now we have had instructions from customers to invest in Lebanon,' a CIS spokesman said. 'It's a question of strategy. The interest on Lebanese treasury bills has dropped significantly so they want to take advantage before it gets too low.'

Yields on Lebanese treasury bills have fallen sharply in recent months after soaring last summer, because of political uncertainty ahead of the presidential elections. But with one-year treasury bill yields around 17 percent, they still outshine the alternatives. The CIS spokesman declined to say how much of the $25 million target figure had been raised.

Investors' enthusiasm does not seem to have been dented by recent suicide bombings in Israel and guerrilla attacks on Israeli forces in South Lebanon which raised questions about the peace process, the CIS spokesman noted. 'It's business as usual. The ones interested in this market are still interested.'