Moody's: Bahrain Registered Three International Debt Placements of $1 Billion

2016-09-10 - 1:52 am

Bahrain Mirror: Moody's, which is one of the top three credit rating agencies in the world, said that Bahrain registered three international debt placements, since the beginning of the year until May 2016, with a total value of $1,035 billion.

A table published by the agency in a research paper discussing the latest changes in the oil prices and their effect on the financial situation in Gulf States, showed that the first international debt placement was set in February, with the value of $275 million, for a period of 5 years until maturity, and with interest rate of 5.95%.

The table added that after that came another debt placement in the same month with a $325 million value with 10 years until maturity, with a 7.65% interest rate. The last placement within the time of the agency's survey (until May 2016), was of $435 million value, with a 3.25% interest rate with 3 years until maturity.

Moody's predicted that the government debt placements will decrease in Gulf countries starting next year, as the oil prices regain a portion of their good status this year. However, the agency did not see that there will be any core effects on the sovereign credit situation in the Gulf states due to the recent improvement in prices.

Moreover, the agency also noted in its paper, that oil prices have fluctuated in recent months, driven by technical matters or the temporary breakdown of some supplies. According to Moody's, this contributed to the slight increase in prices compared to what they were at the beginning of 2016. Therefore, the agency predicted that the average price of oil will remain between $40 to $60 per barrel.

The agency thus expects oil prices to be  $40 a barrel this year and $45 a barrel in 2017.

In May, the agency decreased the rating of Saudi Arabia as (to A1 stable), Bahrain (to BA2 negative), and Oman (to Baa1 stable), and confirmed the rating of Aa2 is held by each of Kuwait, Qatar and the United Arab Emirates, with decreased ratings from negative to stable.

In addition, the agency noted that the credit status of the countries whose ratings were decreased is still weaker than it was before the structural change in the oil market, since it believed that the Gulf States face constant challenges in adapting with an environment where oil prices are low of a long period of time.

Moody's further predicted that the GCC states- especially Oman, Bahrain and Saudi Arabia - will continue to rely on debt placements and financial reserve withdrawals, or a combination of both, to finance the fiscal deficit.


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