“The domestic issues of government debt, which the Central Bank manages on behalf of the Ministry of Finance, have remained heavily oversubscribed. Although interest rates rose slightly, they have now started to trend downwards again and remain at historically low levels,” the Central Bank in a statement added.
“Between January and the end of March 2011, the CBB issued three month treasury bills at an average coverage of 283%, and six month bills an average coverage of 340,” it said.
“Demand for Shariah-compliant securities was even stronger with the coverage of both 3 and 6 month instruments exceeding 500%. Demand for debt with longer maturities also remained strong. The CBB was able to issue 12 month Government Treasury Bills at a coverage of 211%, and recently successfully issued a five-year maturity Islamic Leasing Sukuk in the local market with a value of BD200 million ($530 million) and a rate of return of 5.5%. In addition to strong domestic demand, the Kingdom also has seen a rapid recovery in the price of its U.S. dollar benchmark international issue, the 2020 Government Development Bond. After reaching a high of 6.91% on 15th March, the yield of this bond has declined by 1.11% from a high of 6.91% to 5.80%, its lowest level since 2nd February.”
“The strong domestic demand for Kingdom of Bahrain sovereign debt is testament both to the depth and liquidity of our local markets as well as market participants’ confidence in the Kingdom’s economic management,” said Shaikh Salman bin Isa al Khalifa the CBB’s Executive Director of Banking Operations, in a statement said.
“This is also increasingly being recognized in international markets, as reflected in the rapid recovery in the price of Bahrain’s benchmark sovereign issue,” he added.