Bahrain

Bahraini sovereign bonds fell victim to “malicious rumours” this week after they took a further battering following headlines that Lazard had been appointed as an adviser to the country. The firm, which advises on debt restructuring among other things, was in fact appointed in early May and has been advising the country on its economy for several months, according to a source with knowledge of the matter. Virginia Furness and Michael Turner report.

Bahrain is no closer to accessing the capital markets for additional funding following its support package from its Gulf neighbours agreed last week, according to local investors. And nor is the appointment of Lazard as an advisor to the country seen as a precursor to debt restructuring.

A new wave of liquidity and price crunching could hit Bahrain’s loan market once details of the country’s bailout from its GCC neighbours emerge, according to lenders from the region.

The Kingdom of Bahrain’s five year CDS spread has plummeted as investors’ fears of the country’s inability to meet the repayment of its $750m November 2018 sukuk began to recede after a statement of support from Saudi Arabia, Kuwait and the United Arab Emirates.

Bahrain’s Oil and Gas Holding Company (Nogaholding), which is 100% state owned, is looking for seven year funding.

The Kingdom of Bahrain was set to print a $1bn 7.5 year sukuk on Wednesday evening from a book of $2.2bn, with leads having managed to crunch the coupon to 6.875%. Rivals had called the guidance for the note “a new record” high for a new issue premium, but leads said the illiquidity of the sukuk curve rendered the concept of new issue premium almost meaningless.

The Kingdom of Bahrain has squashed its plans to issue conventional bonds but is forging ahead with its long seven year sukuk, putting out initial price guidance for the deal.

Syndicates away from the Kingdom of Bahrain's new issue are saying that a huge widening in the sovereign’s outstanding bonds is indicative that investors are “not happy” to see the new paper arriving, though those on the deal are simply blaming market volatility.

Bahrain is on track to return to the dollar bond market this week despite weak external conditions, according to bankers involved in the process.

The Kingdom of Bahrain has announced the only new CEEMEA bond mandate of the week so far, looking for a multi-tranche benchmark deal to follow its storming last foray into the international bond markets in September.

A senior BNP Paribas CEEMEA DCM banker has resigned from the bank to join Goldman Sachs.

Savannah Petroleum, the UK oil and gas company focusing on African exploration, has secured a partnership with ASMA Capital Partners, a Bahraini fund manager which invests on behalf of the Islamic Development Bank, as part of its equity capital raising, which is set to be priced today.