LONDON - Lebanon's international bonds rallied more than 1 cent on Monday, two days after a new government was formed in a move intended to bring the country closer to accessing reconstruction funds after a devastating war between Israel and Hezbollah.

Lebanon's dollar-denominated bonds jumped as much as 1.1 cents to being bid at around 18.3 cents across most maturities, the highest level since March 2020, Tradeweb data showed.

The latest moves extend a sharp turnaround for the bonds, which have lingered at deeply distressed levels of around 5 cents for much of the past three years, but have more than doubled since Hezbollah and Israel agreed a ceasefire in November.

Analysts said progress on restructurings for Lebanon's international bonds, which have been in default since spring 2020, might still be some time off.

"(The) discussion on debt restructuring might still be far away, moreover as the rebuilding and reconstruction exercise will need to be the priority," JPMorgan analysts said in a note to clients dated Saturday.

Lebanon's new prime minister, Nawaf Salam, said on Saturday the 24-member cabinet would prioritise financial reforms, reconstruction and the implementation of a United Nations resolution seen as a cornerstone to stability on the Lebanese border with Israel.

(Reporting by Karin Strohecker Editing by Libby George and Gareth Jones)