Bahrain plans to issue $1bn sovereign bond

Bahrain plans to issue a $1 billion sovereign bond with a 10-year maturity, the central bank said on Sunday, with a banking source saying the issue will mostly target US investors.

"The Bahrain government is issuing around $1 billion in conventional bonds, the yield is market driven and the maturity is 10 years," a spokeswoman for the Central Bank of Bahrain (CBB) said.

"The issue is part of Bahrain's sovereign budget process," she added.

A banking source said the planned bond will be a 144a transaction, which is regulated under the US securities commission. The source also said the bond could be issued in March or April.

"Responses (from banks for the mandate) are due today," the source said, speaking on condition of anonymity.

Bahrain, a small oil producer, in 2009 had a budget deficit for the first time since at least 2005 as average oil prices remained below its estimated budget break-even of about $70 to $80 per barrel.

The size of the deficit is yet to be published by the government. Oil revenues account for some 75 percent of government income.

The country increased in December the legal upper limit for its outstanding fixed-income debt to 1.9 billion dinars ($5.04 billion) to allow for higher sovereign debt.

Bahrain issued a $750 million sukuk, or Islamic bond, in June last year. (Reuters)