Arab News, Tuesday, Sep 8, 2020 | Muharram 20, 1442
Bahrain hires banks for second bond issuance of 2020
Bahrain:
Bahrain has hired banks to arrange a multi-tranche sale of US dollar-denominated
sukuk and bonds that would be the country’s second bond issue this year, a
document from one of the banks arranging the deal showed on Tuesday.
The oil producer, which averted a credit crunch in 2018 with a $10 billion aid
package from its wealthy Gulf neighbors, raised $2 billion in May to bolster
finances battered by low oil prices and the coronavirus crisis.
“Appetite for yield is high at the moment so I think demand will be high for
Bahrain, as it’s perceived as a lower-rated country backed by the rest of the
GCC,” said Raffaele Bertoni, head of debt capital markets at Gulf Investment
Corporation, referring to the six-member Gulf Cooperation Council.
Bahrain, rated B+ by S&P and Fitch, hired Bank ABC, Citi, Gulf International
Bank, HSBC, National Bank of Bahrain and Standard Chartered to arrange an
investor call on Tuesday, the document said. It plans to issue seven-year sukuk,
or Sharia-compliant bonds, as well as 12-year conventional bonds and/or 30-year
conventional bonds, subject to market conditions.
“They will have no difficulty placing the shorter-dated sukuk with regional
investors. Pricing on the 12-year or possible 30-year bond will be driven by
international investors,” said Doug Bitcon, head of credit strategies at Rasmala
Investment Bank.
A fixed income strategist expected the sukuk to be priced to yield around 4.5
percent and the 12-year bonds around 5.5 percent, adding there was an
expectation among investors that further Gulf aid for Bahrain would be
forthcoming if needed.
“The 30-year could be priced around 6.25 percent, which is significant since
Bahrain issued four-year sukuk in May this year at that level,” he said.