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$10 Billion Bailout Makes Bahrain Debt Best in Gulf

bahrain debt

Bonds of Bahrain, the smallest member of the Gulf Cooperation Council, have handed investors the biggest return since the island nation’s $10 billion bailout last year. For those holding Oman’s debt, the losses have piled up.

Corporate and sovereign notes from Bahrain delivered an average return of almost 5 percent since the aid was pledged at the start of October, data compiled by Bloomberg show.

The tiny Gulf kingdom, which is closely allied with Saudi Arabia and the U.S., has taken steps to cut its budget deficit as part of the deal. Inclusion in JPMorgan Chase & Co.’s emerging-market indexes, which began last month, also helped.

The situation in Oman couldn’t be more different.

While Bahrain tagged along with the Saudi-led alliance against Shiite Iran and gas-rich Qatar, Oman has resisted pressure to take sides in regional spats, pursuing independent polices that sometimes put it at odds with its neighbors. The sultanate’s lack of reforms aimed at countering the drop in oil prices since 2014, its dwindling capital buffers and plans to tap the debt market for a fourth year have resulted in the only loss for GCC bond investors since September.

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