16 March 2011
By Camilla Hall
Bloomberg News
DUBAI: Bahrain’s 10-year dollar bond fell, sending the yield to a record, and the country’s credit risk climbed to the highest in almost two years after the Gulf nation declared a state of emergency for three months.
The yield on the 5.5 percent bond maturing in March 2020 climbed 33 basis points, or 0.33 percentage points, to 6.93 percent as of 6:08 p.m. in Dubai, according to prices compiled on Bloomberg. Credit-default swaps rose 40 basis points to 355, the highest level since July 2009.
Bond yields and credit risk of governments in the Middle East have surged this year as popular uprisings toppled leaders in Tunisia and Egypt. Bahrain’s King Hamad bin Isa al-Khalifa declared a state of emergency for three months, state television said Tuesday. Troops from neighboring Saudi Arabia arrived Monday as part of a regional force from the six-member Gulf Cooperation Council.
“The state of emergency has added a new dimension to the events in Bahrain,” said Akber Khan, a director at Al-Rayan Investment in the Qatari capital Doha.
Swaps on Bahrain have almost doubled from 185 at the start of 2011, according to CMA prices in London. The yield on Bahrain’s 6.247 percent Islamic note due June 2014 gained 38 basis points to 4.29 percent, a year-high, according to Bloomberg prices.
Mainly Shiite protesters in Bahrain have been demonstrating since Feb. 14, demanding democracy through free elections from Sunni rulers. Shiites comprise the majority in the nation. Iran’s Foreign Ministry spokesman Ramin Mehmanparast said Tuesday “the presence of foreign troops and meddling into Bahrain’s internal affairs will only further complicate the issue.”
“The biggest danger is that Bahrain becomes the battleground for Saudi Arabia, the U.S. and Iran,” said London- based Oliver Bell, senior investment manager at Pictet Asset Management. “It wasn’t clear things had escalated inside Bahrain to necessitate the request for help from Saudi Arabia.”
Bahrain’s King Hamad bin Isa al-Khalifa has offered a national “dialogue” toward limited changes in response. The UAE has sent some 500 soldiers to Bahrain.
Copyright The Daily Star 2011.
