Bahrain recently raised USD 1 billion through a 10-year USD bond, attracting strong investor demand that pushed the Gulf nation’s order books above USD 3.2 billion. The sovereign priced the issue at a yield of 7.125%, tightening from initial price thoughts (IPTs) in the 7.50% area.
The price tightening reflects the willingness among investors to accept lower yields in exchange for exposure to Bahrain’s credit.
“The transaction comprises a 10-year maturity, with settlement scheduled for June 10, 2026, and a maturity date of June 10, 2036. The notes carry a semi-annual coupon and will be listed on the London Stock Exchange’s main market,” reported Zawya.
Joint lead managers and bookrunners for Bahrain’s issuance included Bank ABC, Citi, First Abu Dhabi Bank, National Bank of Bahrain, JP Morgan, and Standard Chartered Bank.
There has been a steady reopening of emerging market issuance windows, with borrower activity picking up as investors seek yield opportunities in a higher-interest rate environment.
Talking about Bahraini bonds, the latter came under pressure after the beginning of the Iran war but recovered by mid-April after the UAE provided financial support. The central banks of the two neighbouring Gulf countries signed a currency swap agreement of AED20 billion, or BHD2 billion (USD 5.5 billion).
The Central Bank of Bahrain has already been in the warfighting mode to save its domestic economy from the fallouts of the Iran war and the disruptions at the Strait of Hormuz. In April, it offered a package of loan deferrals and credit card payments, along with other liquidity support for the individuals and businesses.
Banks have been given flexibility on how they classify affected loans, easing pressure on balance sheets at a time of rising uncertainty. The liquidity support, worth BHD7 billion (USD 18.6 billion), has also enabled the central bank to offer unlimited dinar funding to retail banks against eligible collateral for six months.
The apex financial institution’s move of extending its repo facility to three months, apart from cutting reserve requirements from 5% to 3.5%, has freed up additional capital to support lending.
The minimum liquidity coverage ratio and net stable funding ratio have both been reduced from 100% to 80% in order to inject more cash into the banking system and support economic activity.