Bahrain’s credit risk declined to the lowest level in five months on optimism the nation’s neighbours will soon come to the island-state’s rescue with an aid package.
The cost of insuring Bahrain’s debt against default fell 34 basis points last week on relief that Saudi Arabia, the UAE and Kuwait were said to be considering a $10 billion plan.
The contracts closed at 307 basis points on Friday, the lowest since May and about half the level in June, when concern over the country’s finances spurred a sell-off of Bahraini assets.
Unlike its neighbours, Bahrain, the smallest economy in the oil-rich Gulf Cooperation Council, has been slow to implement fiscal reforms to cope with oil prices that are well below what the nation needs to balance its budget.
The government had been relying on bond offerings to boost its foreign-currency reserves before sentiment turned against risky assets earlier this year.
Authorities scrapped a bond sale in March after investors sought higher yields, but raised $1 billion from Islamic securities.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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