LONDON, March 26 (Reuters) - Lebanon's bondholders have

hired U.S. investment bank Houlihan Lokey ( HLI ) as financial adviser

for eventual debt talks, two sources familiar with the situation

told Reuters.

Lebanon has been engulfed in a severe economic crisis since

2019, when its financial system collapsed under the weight of

massive state debts, which prompted a sovereign default in 2020.

In early February, the country formed a new government with

Nawaf Salam as prime minister, spurring hopes that the country

might make progress to emerge from its protracted default.

Houlihan declined to comment.

Half a dozen firms pitched to the ad hoc group of

bondholders in a process that saw Houlihan and GSA shortlisted,

according to one of the sources.

Lebanon has Eurobonds with a face value of $31.3 billion

outstanding. The debt trades at deeply distressed levels of

around 16-17 cents in the dollar, according to Tradeweb data.