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Bahrain’s dual-tranche dollar-denominated benchmark offering raised $2.5 billion at launch on Wednesday, through a combination of a sukuk and a conventional bond issuance, making the kingdom the latest Gulf sovereign state to tap debt markets.
The eight-year long sukuk raised $1.5 billion at launch, with a coupon rate of 5.875%. The price was tightened from the initial price thoughts (IPTs) in the 6.25% area.
The 12-year conventional bond saw an issue size of $1 billion at a coupon rate of 6.625%, with the price marginally tightened from IPTs in the 7% area.
The combined books at launch drew investor demand in excess of $8.4 billion, excluding JLM interest. This was split between $4.5 billion+ for the sukuk and the $3.9 billion+ for the 12-year issuance.
The sukuk has been issued by the CBB International Sukuk Programme Company, with a February 2034 maturity, while the 12-year bond has been issued through Bahrain’s Ministry of Finance and National Economy, with an October 2037 maturity.
Bahrain, rated B+ by S&P (Neg) / B+ by Fitch (Neg), will offer the eight-year Ijara/Murabaha sukuk under its Trust Certificate Issuance Programme.
The 12-year bond will come under the kingdom’s Global Medium Term Note Programme.
The expected issue ratings for both is B+ by S&P / B+ by Fitch.
The offerings will be listed on the Main Market of the London Stock Exchange.
Abu Dhabi Commercial Bank, Bank ABC, Citi, First Abu Dhabi Bank, GIB Capital, JP Morgan, Sharjah Islamic Bank, and Standard Chartered Bank are the Joint Bookrunners on the sukuk.
The same banks, with the exception of Sharjah Islamic Bank, are Joint Bookrunners on the 12-year bond.
In January, Moody’s analysts said Bahrain was expected to issue $2 billion to $3 billion of international bonds, including sukuk in 2025, as it seeks ways to refinance debt due to strained finances from lower oil prices.
In April, ratings agency S&P Global downgraded Bahrain’s outlook to ‘negative’ from ‘stable’, on the basis of market volatility and weaker financing conditions.
Bahrain already raised $2.5 billion from a combined sukuk and conventional issue earlier this year, tapping into investor appetite for sovereign debt.
In recent weeks, the GCC has a seen a series of sovereign debt issuances in recent weeks, with Kuwait, Abu Dhabi and Saudi Arabia raising debt in recent weeks.
(Writing by Bindu Rai, editing by Brinda Darasha)
