Ask Your Advisor: De-risking out of Bahrain

Just like soldiers, investors need to regularly assess various risks and consider retreating from investments to avoid potential losses. Take the case with the sovereign bonds of Bahrain.

Bahrain – an island country sandwiched by Saudi Arabia and Qatar – is  dependent on oil and gas exports, making its economy sensitive to global oil-price swings. A victim of easing oil prices and the pandemic, Bahrain went from a credit rating of A- in 2011 to B+ at present, effectively losing its investment-grade status.

Last February, a major ratings agency revised its outlook on Bahrain’s long-term foreign currency sovereign bonds to negative, citing weak public finances, rising interest burden, and increasing debt-to-GDP ratio – at 121% in 2023. Despite the news, some investors continue to be hopeful,