Bahrain T-bills oversubscribed despite debt concerns

• Debt burden higher
• Credit rating outlook negative
• IMF urges consolidation

The government of Bahrain sold close to $190 million in three-month treasury bills this week in a sale that was almost three times oversubscribed, despite IMF concerns over the kingdom’s rising debt levels.

The BD70 million in bills carry a weighted average interest rate of 5.23 percent, the state-run Bahrain News Agency (BNA) reported on Monday. 

The BNA said the sale brings the total outstanding value of outstanding government treasury bills to BD2.11 billion.

Bahrain’s debt-to-GDP ratio stands at around 130 percent, more than triple that of Oman, the second most indebted Gulf state. 

S&P Global Ratings in April revised its outlook on Bahrain’s B+ credit rating – already below investment grade – to negative, citing a debt burden “higher than anticipated in recent years”.

• IMF official urges Bahrain to cut debt and spending
• Bahrain at a crossroads: Economic challenges loom
• Bahrain debt hits $48bn but analyst downplays spending fears

“It’s a no brainer,” Jihad Azour, the IMF’s director for the Middle East and Central Asia, said in an interview with AGBI in Dubai earlier this month. “They need to consolidate; they cannot avoid consolidation.” 

Azour, a former Lebanese finance minister, urged Bahrain to reduce public debt and take steps to accelerate economic growth.

Bahrain’s current account surplus narrowed last year on the back of lower oil revenue and higher external debt servicing, AGBI reported this month, based on a ministry of finance report.

A country’s current account balance is a record of all its transactions with the rest of the world.