DUBAI (Reuters) – Bahrain is expected to raise $ 2 billion in three-tier bond sales on Wednesday, a document showed, after a coronavirus and low-oil pandemic compounded its fiscal deficit and pushed its overall debt had yet to be paid to nearly $ 40 billion.
Debt sales amid uncertainty over future fiscal support for the small oil-producing state, as Gulf’s wealthy neighbors have previously come to Bahrain’s aid to deal with them.
Bahrain gave up initial price guidance of around 4.875% for seven-year bonds, around 5.75% for 12-year bonds and around 6.75% for 30-year bonds, according to the document from one of the banks that arranged the agreement .
Bahrain’s fiscal deficit is estimated to have more than doubled to $ 4.4 billion last year, compared to a budgeted $ 2.1 billion, according to a bond forecast revised by Reuters, which cited initial estimate figures.
That pushed its deficit to 14% of gross domestic product, compared to a budgeted 7% and a deficit of 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 funding needs by 2022, the guide said.
So far Bahrain has received more than $ 6 billion out of that interest package and expects another $ 1.85 billion this year.
But the forecast said there was no guarantee that any further support could be available and that times of fiscal support could be subject to delays.
“The COVID-19 pandemic and oil prices have had a major impact on Saudi Arabia and other GCC countries, and these factors could reduce the likelihood of additional support and any payment time,” he said.
Bahrain’s total debt was $ 39.8 billion at the end of 2020, up 118% of GDP. It stood at $ 36.1 billion a year earlier, or 93.8% of GDP.
Reciting with Yousef Saba; Edited by Andrew Heavens and Alex Richardson