Bahrain’s oil company targets $1bn through dual-tranche bond

Bahrain’s state-owned oil company Nogaholding plans to raise $1bn through a dual-tranche U.S. dollar-denominated bond on Wednesday, a document by one of the banks leading the transaction showed.

The deal is the first foray by a Bahraini entity into the international debt markets since the government obtained an aid package from its Gulf neighbours earlier this month.

Nogaholding, the investment arm of Bahrain’s National Oil and Gas Authority, tried to raise international funds in April, but that deal was delayed, partly by emerging-market weakness and partly by doubts among investors that Bahrain could repay its debt.

Rated BB-(minus) by Fitch, Nogaholding is marketing a six-year bond with an initial price guidance of around 7.875 per cent, and 10-year notes with an initial guidance of around 8.5 per cent.

Each tranche is expected to raise $500m, according to the document.

The government of Bahrain, hit by a slump in oil prices, has increasingly relied on external funding, but in March it had to cancel a planned sale of international conventional bonds as investors demanded higher yields.

An agreement signed earlier this month with Gulf allies Saudi Arabia, the United Arab Emirates and Kuwait for a $10bn aid package tied to fiscal reforms has averted the risk of a debt crisis.

Read: Bahrain to receive up to $2bn in first slice of Gulf aid

BNP Paribas, Citi and JPMorgan, as well as Bank ABC, Gulf International Bank, HSBC, NBB, Societe Generale, and Standard Chartered are arranging Nogaholding’s debt sale.