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Wed 17 Feb 2016 01:08 PM

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Bahrain lifts bond re-tap to $750m

The kingdom increased its borrowing size by $250 million on the back of strong demand with the order book topping $1.35 billion

Bahrain lifts bond re-tap to $750m
Manama, Bahrain

Bahrain has upsized and launched a $750 million, two-part bond re-opening, at the tighter end of its previous guidance, a document from lead arrangers showed.

The kingdom increased its borrowing size by $250 million on the back of strong demand with the order book topping $1.35 billion, it said in a document released late on Tuesday.

The finances of the small energy exporter, with less generous oil and financial reserves than its neighbours, have been hard hit by the drop in oil prices.

A re-tap at start of the year is seen as a positive for Bahrain, as it will potentially save the kingdom from paying much higher interest rates. Increased debt issuance this year by other Gulf governments and companies may squeeze liquidity, in addition to the risk of another US interest rate rise.

Bahrain launched its re-tap on Tuesday, split between five- and 10-year portions, at 5.70 percent and 7.40 percent respectively. Previous guidance was 5.70-5.80 percent and 7.40-7.50 percent.

Initial price thoughts were set on Tuesday at the 5.875 percent area for the five-year tranche and the 7.5 percent area for the 10-year tranche.

Under a tap transaction, a "new" deal is issued which is, in effect, a copy of an existing bond with the same terms and conditions. However, the pricing is usually adjusted to reflect market performance between the issuances.

In November, Bahrain raised $1.5 billion in bonds paying 5.875 percent in the five-year tranche and 7.0 percent in the 10-year.

Bank ABC, BNP Paribas, Citigroup, HSBC and JP Morgan, which arranged Bahrain's original bond in November, are leading the re-tap.