Bahrain returns to global markets with dual bond, sukuk sale

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Bahrain plans to tap global debt markets on Wednesday with a two-part issuance, the latest Gulf sovereign to capitalise on investor appetite for regional debt.

Saudi Arabia, Abu Dhabi and Kuwait have all raised debt in recent weeks as attractive borrowing costs and strong demand allow governments to diversify funding sources to help plug budget deficits, pay down debt, and invest in economic diversification.

Bahrain is in the market for an Islamic bond, or sukuk, issue with a tenor of slightly over eight years and a 12-year conventional bond, and set early price guidance at around 6.25 per cent and 7 per cent respectively, fixed-income news service IFR reported.

Ratings agency S&P Global revised Bahrain’s outlook to “negative” from “stable” in April, citing ongoing market volatility, high debt, a rising deficit and weaker financing conditions that could increase the government’s interest burden.

Among the Gulf’s smaller oil producers, Bahrain has accelerated efforts to diversify its economy away from hydrocarbons into sectors such as tourism, financial services and logistics.

It raised $2.5bn from a combined sukuk and conventional issue earlier this year.