Bahrain, which quashed anti- government protests in 2011, will pay more to raise $1.5 billion than it did in prior 10-year bond sales, a person familiar with the sale said, as investors focus on political risks.
The smallest member of the six-nation Gulf Cooperation Council priced bonds at 437.5 basis points over similar-maturity midswaps, or about 6.15 percent, according to the person, who asked not to be identified because the information is private. Bahrain last sold 10-year debt in March 2010 at 5.5 percent, data compiled by Bloomberg show. The yield on the bonds due in March 2020 was 5.54 percent at 4:31 p.m. in Dubai.
“International investors are still a bit unsettled about the situation there and they would demand a premium to reflect their nervousness,” Nick Stadtmiller, head of fixed income research at Dubai-based Emirates NBD PJSC (EMIRATES), said today. “Credit spreads for Bahrain are quite a bit wider than they were a couple of years ago, which largely has to do with political uncertainty.”
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