Bahrain To Meet Investors Ahead Of Potential Sovereign Bond
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Bahrain To Meet Investors Ahead Of Potential Sovereign Bond

Bahrain To Meet Investors Ahead Of Potential Sovereign Bond

Bahrain last sold a sovereign bond in July 2013, when it completed a $1.5 billion deal with a ten-year lifespan.

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Bahrain has chosen four banks to arrange investor meetings before a potential long-dated sovereign bond issue, said a document on Tuesday from lead managers for the kingdom’s first debt issue in over a year.

The Gulf Arab state hopes to benefit from historically low borrowing rates and high investor demand for Gulf bonds, which are expected to shake-off any negative impact from regional unrest in Iraq and Syria, to secure favourable terms for a deal of up to 30 years duration.

Bahrain has chosen Citigroup, Gulf International Bank , Mitsubishi UFJ and Standard Chartered to arrange the roadshows, which will begin on Sept. 2, according to the document.

A dollar-denominated bond of benchmark size – traditionally understood to mean upwards of $500 million in total – could follow the roadshows, subject to market conditions. The document described the lifespan of the possible bond as ‘long-dated’ without elaborating further.

The kingdom last sold a sovereign bond in July 2013, when it completed a $1.5 billion deal with a ten-year lifespan that attracted orders from investors worth more than five times the final amount.

Bahrain has been expected to come to the market for some time, and the choice of banks to arrange the deal had been rumoured in the market, albeit unconfirmed by those involved.

Unlike other states in the Gulf Arab region with significant cash reserves due to their hydrocarbon wealth, Bahrain runs a budget deficit and uses the bond market to fill the gap between income and expenditure.

In 2013, the kingdom’s deficit nearly doubled to BD410 million ($1.1 billion) despite spending rising at its slowest rate since 2009.

Bahrain had been putting more cash into social programmes since being hit by Arab Spring-inspired unrest in early 2011.

Roadshows will held in Saudi Arabia and the United Arab Emirates on September 2 and 3 respectively, while there will also be three days of meetings with investors in the United States between September 3 and September 5.

The schedule will conclude in London on September 8.


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