Bahrain has been working with asset manager and advisory firm Lazard for several months, a source close to the matter said.
The country’s finances have been strained by a slump in oil prices in 2014 and its currency and international bonds reached multi-year lows last week, as investors increasingly doubted Bahrain’s ability to stave off a potential financial crisis.
But Bahrain’s Gulf diplomatic allies last week pledged to prevent its ballooning public debt from triggering a credit crunch. The Bahraini dinar and its bonds rallied on the news.
Lazard, which among other things specialises in sovereign financial advisory and debt restructuring, has been working as a financial adviser with the Bahraini government for months on a number of issues including the set up of an investment conference the country held in May, the source said, without elaborating further.
Bahrain’s officials did not immediately respond to requests for comment.
Saudi Arabia, the United Arab Emirates and Kuwait said in a statement last week they were in discussions on aid for Bahrain and would consider all options to support the country.
They promised “an integrated programme that will soon be announced to enable the kingdom of Bahrain to support its economic reforms and fiscal stability”. No details were given.
Bankers said last week’s pledge of aid to Bahrain eased fears that Manama might be unable to redeem a $750m Islamic bond that will mature in November.