Bahrain returns to dollar debt market, reports Bloomberg

Agencies | Manama                                                

The Daily Tribune – www.newsofbahrain.com     

Bahrain is tapping the public debt market for the first time since 2021, taking advantage of a decline in its borrowing costs and a surge in oil prices, reported Bloomberg.

The Kingdom, the report said, plans to sell dollar-denominated Islamic securities maturing in seven years plus a 12-year conventional dollar bond, citing a person familiar with the matter, who asked not to be named.

The offering follows S&P Global Ratings raising the outlook on Bahrain’s debt to positive in November on expectations that the government will continue efforts to reduce its budget deficit and that it will benefit from high oil prices.

The kingdom is rated B+ by the credit assessor, four levels below investment grade. Bahrain has a total of around $2.5 billion of debt maturities this year, including a $1.5 billion bond maturing in August, according to Dubai-based Arqaam Capital. 

“They will be taking $1.5 billion out in August, so if they do a similar size it should do okay, because that means net supply for the year is basically zero,” said Abdul Kadir Hussain, head of fixed-income asset management at Arqaam Capital.

“Sukuk demand should be decent given the general dearth of supply in that sector.”

The yield on Bahrain’s bond due 2034 has fallen by about two percentage points since October to 7.2% as of 10:00 a.m. in London.

The cost to insure the nation’s debt against default has also declined around 120 basis points since July to around 245, according to five-year credit-default swaps. 

The kingdom hired Bank ABC, Citigroup Inc., First Abu Dhabi Bank, HSBC Holdings Plc, JPMorgan Chase & Co., National Bank of Bahrain and Standard Chartered Plc to arrange calls with bond investors on Wednesday.