RIYADH- Bahrain has mandated banks for a dual-tranche dollar-denominated bond issue, which would be its first since it obtained a $10 billion bailout from its Gulf allies last year to avert a credit crunch.

The small Gulf kingdom is looking to issue seven-year Islamic bonds and 12-year conventional bonds, according to a document seen by Reuters

It has mandated BNP Paribas, Citi, Gulf International Bank, JP Morgan , National Bank of Bahrain and Standard Chartered to organise investor meetings in Asia, the United States, the Middle East and Britain from Thursday, according to the document.

The Bahraini government last year received $10 billion in pledges from Saudi Arabia, Kuwait and the United Arab Emirates after low oil prices pushed its public debt to almost 93% of gross domestic product.

Its existing bonds have since jumped back, as investors know that Bahrain, though junk rated, can count on support from its wealthier allies while it seeks to repair its debt-ridden finances.

Bahrain is aiming to balance its budget by 2023, a target it set for itself as part of last year’s bailout, when it embarked on a series of reforms including further subsidy cuts and the introduction of a 5% value-added tax.

Out of the $10 billion Gulf aid, Bahrain received $2.3 billion last year and is expecting another $2.28 billion in 2019, the government said in May.

It is set to receive further payments of $1.76 billion in 2020, $1.85 billion in 2021, $1.42 billion in 2022 and $650 million in 2023.

This year, it expects a deficit of 4.7% of GDP, down from a 6.2% deficit last year.

(Editing by Steve Orlofsky) ((Alexander.Cornwell@thomsonreuters.com;))