Bahrain Plans $2-3 Billion International Bonds and Sukuk in 2025

Bahrain is set to issue international bonds and sukuk totaling between $2 billion and $3 billion in 2025, aiming to bolster its fiscal position and finance key infrastructure projects. This strategic move underscores the kingdom's commitment to diversifying its funding sources and enhancing its financial stability.

The forthcoming issuance is expected to comprise two primary components: a conventional bond with a 12-year maturity and a sukuk with a 7-year maturity. The conventional bond is anticipated to offer a fixed interest rate of approximately 7.5% per annum, while the sukuk is projected to provide a fixed profit rate of around 6% per annum. These terms are designed to attract a broad spectrum of international investors, reflecting Bahrain's efforts to tap into diverse financial markets.

This initiative follows Bahrain's successful $2 billion sukuk and bond issuance in February 2024, which garnered over $14 billion in investor demand. The 2024 issuance included a $1 billion sukuk maturing in seven years at a 6% profit rate and a $1 billion conventional bond maturing in 12 years at a 7.5% interest rate. The strong investor interest in 2024 is expected to positively influence the upcoming 2025 issuance, potentially leading to favorable pricing and terms.

The funds raised from the 2025 issuance are intended to support Bahrain's fiscal deficit and finance critical infrastructure projects. The kingdom has been actively working to reduce its budget deficit, with projections indicating a decrease from 494 million dinars ($1.31 billion) in 2023 to 76 million dinars in 2024. The successful execution of the 2025 issuance is anticipated to further strengthen Bahrain's fiscal position and support its economic development objectives.

Bahrain's approach to international debt issuance reflects a broader trend in the Gulf Cooperation Council (GCC) region, where countries are increasingly utilizing bond and sukuk markets to finance national budgets and infrastructure projects. This trend highlights the region's growing integration into global financial markets and its efforts to diversify funding sources beyond traditional oil revenues.

The upcoming 2025 issuance is expected to attract significant interest from international investors, including sovereign wealth funds, pension funds, and other institutional investors. Bahrain's strategic location, stable economic environment, and commitment to fiscal reforms are key factors that enhance its appeal to global investors.

In preparation for the 2025 issuance, Bahrain has engaged with a consortium of leading international and regional banks to manage the offering. These financial institutions will play a crucial role in structuring the issuance, marketing it to potential investors, and ensuring its successful placement in the international capital markets.