Gulf's Weakest Links See Cost of Money Rise With Political Risk - Bloomberg

Gulf's Weakest Links See Cost of Money Rise With Political Risk - Bloomberg:

Bahrain and Oman may have missed a golden opportunity to lock in cheap foreign financing.

Ever since tensions between Iran and its Arab neighbors began boiling over this month, the countries’ bonds have been leading losses across the six-nation Gulf Cooperation Council. The sell-off is unwinding gains that pushed the yield on Bahrain’s 10-year dollar debt to an all-time low in April, and that on Oman’s equivalent note to a six-month low earlier in May.

If the rout has legs, the higher borrowing costs could strain the nations’ public finances, already considered the weakest in the region. Oman risks slipping deeper into junk-level credit ratings, while Bahrain’s ability to eliminate a budget deficit remains a challenge, according to S&P Global Ratings. The island kingdom plans to return to international bond markets this year for the first time since its Gulf allies pledged a $10 billion aid package.