Mubasher: Bahrain is projected to raise $2 billion in a three-tranche bond sale on Wednesday, Reuters said citing a document from one of the banks arranging the deal.

The debt sale comes after the Covid-19 pandemic and low oil prices exacerbated the small oil-producing state’s fiscal deficit and raised total outstanding debt to nearly $40 billion.

Bahrain gave initial price guidance of around 4.875% for a seven-year bond tranche, around 5.75% for 12-year notes, and around 6.75% for 30-year bonds.

The Gulf state’s fiscal deficit is estimated to have more than doubled to $4.4 billion in 2020, compared with a budgeted $2.1 billion. That pushed its deficit to 14% of gross domestic product (GDP), compared with a budgeted 7% and a deficit that was 5% of GDP in 2019.

In 2018, Saudi Arabia, the UAE, and Kuwait pledged a $10 billion aid package over five years to Bahrain. The aid is estimated to cover almost half of Bahrain’s total financing needs through 2022.

So far, Bahrain has received more than $6 billion out of the zero-interest package and predicts a further $1.85 billion in 2021.