© Reuters.

By Yousef Saba

DUBAI (Reuters) – Bahrain is expected to raise $2 billion in a three-tranche bond sale on Wednesday, a document showed, after the coronavirus pandemic and low oil prices exacerbated its fiscal deficit and pushed total outstanding debt to nearly $40 billion.

The debt sale comes amid uncertainty over future fiscal help for the small oil-producing state, as wealthier Gulf neighbours who have previously come to Bahrain’s aid have their own financial woes to deal with.

Bahrain gave initial price guidance of around 4.875% for a seven-year bond tranche, around 5.75% for 12-year notes and around 6.75% for 30-year bonds, according to the document from one of the banks arranging the deal.

Bahrain’s fiscal deficit is estimated to have more than doubled to $4.4 billion last year, compared with a budgeted $2.1 billion, according to a bond prospectus reviewed by Reuters, that cited preliminary estimated figures.

That pushed its deficit to 14% of gross domestic product, compared with a budgeted 7% and a deficit that was 5% of GDP in 2019.

In 2018, Saudi Arabia, the United Arab Emirates and Kuwait pledged a $10 billion aid package over five years to Bahrain. That aid is estimated to cover about half of Bahrain’s total financing needs through 2022, the prospectus said.

Bahrain has so far received more than $6 billion out of that zero-interest package and expects a further $1.85 billion this year.

But the prospectus said there was no assurance that any further support may be available and that the timings of pledged fiscal support may be subject to delays.

“Saudi Arabia and other GCC countries have also been significantly negatively impacted by the COVID-19 pandemic and low oil prices, and such factors may reduce the likelihood of additional support and timing of any payment,” it said.

Bahrain’s total outstanding debt was $39.8 billion as of the end of 2020, soaring to 118% of GDP. It stood at $36.1 billion a year earlier, or 93.8% of GDP.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *