Financial Times notes today that “Bahrain will add to efforts by the Arab Gulf states to create an active bond market in the region by raising more than $1bn in a debt sale.” Abu Dhabi and Qatar have already sold $6bn worth of bonds in the past few months, the piece remarks, and are expected to issue more (and at longer maturities) along with Kuwait and Dubai. The country will sell $500m in sharia-compliant five year bonds—referred to as sukuk—at the end of May.
Bahrain’s bond market, while admittedly small, is nevertheless viewed as the only real bond market of the six Gulf states. This is because the region, already flush with oil revenue, hitherto had little need for it. Currently, outstanding debt constitutes only roughly 10% of the region’s GDP. But it is hoped that a thriving state bond market will help pave the way for benchmarks against which corporate issuers in the region can price their own debt.