Ask Your Advisor: Parking money after Bahrain

The Kingdom of Bahrain finds itself in a more vulnerable position now. Last year, we talked about de-risking out of its sovereign bonds after a major ratings agency gave the country a negative outlook due to worsening fiscal conditions.

Since then, Bahrain has seen two credit rating downgrades and found itself in the crossroads of among the key geopolitical flashpoints in recent months.

These build the case for holders of Bahrain’s sovereign bonds to switch to relative safety.

Oil dependence

Subdued oil prices last year cut government revenue and fueled expectations of a wider fiscal deficit.

Government debt is also projected to climb over 140% of gross domestic product. Refinancing this may keep the interest burden elevated, as much of its sovereign bonds pay premium coupon interest rates