Bahrain bond sale gives more time to finalize Gulf support package: CE

Bahrain’s privately-placed FX sovereign bond sale will help it to meet its external financing needs for a bit longer, but fresh international bond sales are off the cards until financing from the rest of the Gulf is secured, Capital Economics (CE) said in a recent report.

"The $500 million raised from the bond issue to five regional banks will cover Bahrain’s external financing needs for a couple more months at least, giving the authorities extra time to finalize the details of a financing package from the other Gulf countries," it noted.

According to the London-based consultancy, the Bahraini government is "probably hesitant to access international bond markets again given the scrutiny of the country’s dire public finances that this would entail."

"The backdrop of the turmoil in EM financial markets and rising bond yields may have also swayed policymakers in favor of a private sale," it added.

Earlier this week, Bloomberg reported that Bahrain had raised $500 million from a private placement of bonds with five regional banks which included Bank ABC, Emirates NBD, Kuwait Finance House, Noor Bank and Sharjah Islamic Bank.

In August, the finance ministers of Saudi Arabia, the UAE and Kuwait had reaffirmed their countries’ commitment to supporting the financial stability in Bahrain.

Meanwhile, Capital Economics warned that the Egyptian government's appetite for fiscal consolidation may be waning though it still prioritizes bringing down its high debt-to-GDP ratio.

It cited the government signing contracts with international banks to hedge oil prices and planning similar move to protect against wheat price fluctuations as reasons.

"Without fresh subsidy cuts, it will be difficult for Egypt to meet the debt targets outlined by the International Monetary Fund, potentially putting future loan disbursements at risk," the report stated.