DUBAI, April 19 (Reuters) – Bahrain has secured a loan of around $ 1 billion to repay a bond that was due at the end of March, three sources familiar with the matter said after the Gulf state suspended its plan to ‘international debt issuance due to bad market conditions.
The small Gulf oil producer, rated junk by all three major rating agencies, secured the loan from a group of local and international banks last month and used it to repay $ 1.25 billion in bonds matured on March 31, the sources said.
A spokesperson for the finance ministry did not immediately respond to a request for comment.
Bahrain was bailed out with $ 10 billion in financial aid from some of its wealthiest regional allies in 2018 as it headed for a credit crunch.
Sources told Reuters in March the country was in talks with lenders for a loan after it suspended plans to issue international bonds amid market volatility caused by the novel coronavirus pandemic and falling prices petrol.
On April 1, the Ministry of Finance and National Economy announced that it had repaid the bonds of $ 1.25 billion.
“The successful repayment demonstrates the strength and robustness of the Kingdom’s balanced budget program,” he said.
Bahrain has said it wants to achieve a balanced budget by 2022 as part of a tax reform program tied to the $ 10 billion in financial assistance received in 2018 from Saudi Arabia, Kuwait and the United Arab Emirates .
The government could run a budget deficit of 15.7% of GDP this year against a deficit of 10.6% in 2019, according to the International Monetary Fund, while the economy could contract by 3.6%. The IMF expects growth to rebound to 3% in 2021.
Report by Davide Barbuscia and Aziz El Yaakoubi; Editing by Emelia Sithole-Matarise