DUBAI: Bahrain was set to raise $1 billion with an international issue of Islamic bonds on Wednesday but did not proceed with a proposed conventional bond sale because it found the pricing demands of some investors too costly, banking sources said.

The deal illustrated the market pressures which Bahrain, rated junk by all three of the world’s top credit rating agencies, faces as it finances itself in an era of low oil prices.

When the kingdom started meeting investors last week ahead of its debt issue, it was considering a sale of a 7-1/2-year sukuk, and also an issue of conventional bonds with maturities of 12 or 30 years or both, depending on market conditions, documents from the banks leading the deal showed. On Wednesday, Bahrain went ahead with the sukuk sale, setting the final size of the issue at $1 billion after having received orders of around $2bn, a modest amount by the standards of Gulf debt issues.

Published in Dawn, March 29th, 2018