UPDATE 1-Bahrain markets dual-tranche bonds for second debt sale this year

DUBAI, Sept 9 (Reuters) – Bahrain began marketing its second bond offering of the year on Wednesday, a dual-tranche issuance comprising seven-year sukuk, or Islamic bonds, and a 12-year conventional tranche, a document showed.

The small oil producer, which averted a credit crunch in 2018 with a $10 billion aid package from its wealthy Gulf neighbours, raised $2 billion in May to bolster finances battered by low oil prices and the coronavirus crisis.

It gave initial price guidance of around 4.5% for the sukuk and around 5.75% for the conventional bonds, the document from one of the banks arranging the deal showed.

Each tranche will be of benchmark size, which usually means at least $500 million, the document showed. Two financial sources and a banker said Bahrain would likely issue around $2 billion.

The finance ministry did not immediately respond to a request for comment.

Bahrain, rated B+ by S&P and Fitch, hired Bank ABC, Citi, Gulf International Bank, HSBC, National Bank of Bahrain and Standard Chartered to arrange the deal.

It had been considering issuing a 30-year conventional tranche in lieu of the 12-year bonds or alongside them, but opted for the shorter tenor, according to a separate bank document seen by Reuters on Tuesday.

“There was no investor appetite for a 30-year tranche. Bahrain has a relatively low amount of bonds maturing in 12 years, so it was a sweet spot,” one of the financial sources said. (Reporting by Yousef Saba; Editing by Jacqueline Wong and Andrew Heavens)

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