MIDEAST DEBT-Bahrain bond-sukuk spread balloons as investors disagree on credit outlook | Reuters

MIDEAST DEBT-Bahrain bond-sukuk spread balloons as investors disagree on credit outlook | Reuters:

The price gap between Bahrain’s U.S. dollar conventional and Islamic bonds has widened to record levels, indicating a sharp disagreement between global investors and regional institutions over the country’s ability to avoid a funding crunch. Bahrain’s international sukuk have traditionally yielded less than its conventional paper. But that gap has ballooned in the past few months, suggesting European and U.S. investors - who focus on the conventional bonds - have been dumping the debt while Islamic investors, who are mostly from the Gulf region, have largely maintained their exposure. A huge budget deficit relative to the small size of its economy, and delays in fiscal reforms, have increasingly forced Bahrain to rely on international debt markets since oil prices slumped in 2014.