LONDON - The cost of insuring exposure to Bahrain's sovereign debt spiked to a record high on Tuesday and sovereign dollar bonds fell to record lows as investors worried about the country's ability to avoid a funding crunch.
The Bahraini dinar too weakened in forward markets against the dollar, with one-year dollar-dinar one-year forwards rising to 407.6 points, the highest since September 2016. Like other Gulf currencies, the dinar is pegged to the dollar.
Bahrain's five-year credit default swaps rose to 543 basis points (bps), according to data from IHS Markit, up 7 bps from Monday's close, its highest ever level.
The country's 2023 sovereign dollar bond fell 0.9 cents to a fresh record low of 87.44 cents, according to Thomson Reuters data, and the 2044 bond fell 0.6 cents to 68.9 cents.
(Reporting by Claire Milhench; editing by Sujata Rao) ((firstname.lastname@example.org; +44 (0)207 542 3571; Reuters Messaging: email@example.com))