BAHRAIN: Deficit expands in H1 ahead of sukuk issuance

GULF COUNTRIES - In Brief 30 Sep 2025 by Justin Alexander

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It's a busy time for Gulf sovereign bond issuance, with $3bn from Abu Dhabi last week, $11.25bn from Kuwait today (see this note) and another UAE emirate expected to issue soon. Next up is Bahrain, with its second issuance of the year, following its $2.5bn bond/sukuk in May. There is some important new data in the prospectus. The latest figures for the 2024 outturn are weaker than the preliminary data in the April prospectus. Revenue is -3.3% lower than in the preliminary data, mainly because revenue from investments & properties has been revised down by -28%. Expenditure is -0.4% lower than in the preliminary data, but is still 10% above budget. The overall result is that the deficit is 9% wider than in the preliminary data and a third more than in 2023, at -5.8% of GDP. The H1-2025 data is not encouraging either, with an expansion in the deficit to about -8.6% of prorated GDP. The full-year outturn could be even weaker, given that oil prices have trended slightly lower in Q3 than the $72 average in H1, and historically, spending tends to be higher in the second half of the year It's not a surprise that hydrocarbon revenue is down, given the -14% decline in Brent crude. However, there was some hope that this might have been partly offset by higher crude production, up nearly 4% according to official data via JODI, recovering from a very weak Q1-24 performance at Abu Safah, the main field, which has been undergoing considerable maintenance in recent years. However, hydrocarbon revenue actually fell by even more than Brent, down by -16%. The problem may have been gas. Production in Q1, the most recent data available, was down by -11% y/y to the lowest in many years. Tha...