DUBAI - Bahrain was set to raise $2 billion in bonds on Wednesday as, with financing conditions expected to tighten, the heavily indebted Gulf country moves quickly to raise extra cash.
Manama was marketing dual-tranche dollar-denominated bonds comprising sukuk and conventional portions, a term sheet reviewed by Reuters showed.
It gave initial price guidance of 4.25% to 4.375% for 7-1/2-year sukuk, or Islamic bonds, and between 6% and 6.125% for 12-1/2-year bonds, the document showed.
Those levels were subsequently tightened as orders of over $4.7 billion piled in.
BNP Paribas, Citi, JPMorgan and National Bank of Bahrain are arranging the debt sale, which is expected to price later on Wednesday.
Rated below investment grade, Bahrain was bailed out to avoid a credit crunch in 2018 with a $10 billion package from wealthier Saudi Arabia, Kuwait, and the United Arab Emirates.
That money was linked to plans to fix its finances by reining in state spending, but after the coronavirus crisis strained its finances, Bahrain in September postponed by two years plans to balance its budget.
Ratings agency Moody's said on Tuesday it expected Bahrain to receive additional financing from its Gulf allies to cover its needs and mitigate liquidity risks.
Saudi Arabia, Kuwait, and the UAE last month reiterated their support for Bahrain's plans to balance its budget, but they have not yet publicly committed additional funding.
Bahrain's public debt climbed to 133% of gross domestic product (GDP) last year from 102% in 2019, according to the International Monetary Fund.
Saudi Arabia on Tuesday raised $3.25 billion in bonds, as borrowers take advantage of accommodating financial conditions ahead of expectations of policy tightening from the U.S. Federal Reserve.
(Reporting by Yousef Saba and Davide Barbuscia; Editing by Christian Schmollinger and John Stonestreet) ((Yousef.Saba@thomsonreuters.com; +971562166204; https://twitter.com/YousefSaba))