Bahrain Plans Return to Debt Market With Mix of Bonds, Sukuk

2020-09-03 - 8:17 p

Bahrain Mirror: Bahrain is planning to return to the dollar bond market, according to people familiar with the matter, as the country faces one of the world's biggest budget deficits this year, Bloomberg website stated.

The Gulf nation sent a request for proposals to banks seeking to offer a benchmark-size issue, the people said, asking not to be identified because the discussions are private. Benchmark typically means at least $500 million equivalent.

The sale may include a mix of conventional bonds and Islamic securities known as sukuk, the people said.

Should the kingdom proceed with the plan, it would follow Abu Dhabi, the capital of the United Arab Emirates, which raised $5 billion in a three-part offering last week.

Bahrain is under fiscal strain despite a $10 billion bailout package pledged by its wealthier neighbors in 2018. The smallest among economies of the six Gulf Cooperation Council members, Bahrain is on course to rack up a deficit that the International Monetary Fund projects will be among the world's 10 biggest this year at 15.7% of gross domestic product.

In May, the government sold $2 billion in 10-year notes and 4.5-year Islamic securities, becoming the lowest-rated country to sell dollar bonds since the market hiatus triggered by the Covid-19 pandemic.

The yield on Bahrain's $1 billion bond due 2030 dropped this month to the lowest level since its pricing in May. It may need to raise as much as $1 billion in the second half of the year, according to Dubai-based Arqaam Capital.

Arabic Version