Hopes for Bahrain Grand Prix dim as investors flee and bond risk surges in Bahrain

Demonstrations in Bahrain Elevate Investment Risks
Donna Abu-Nasr – 06 February, 2012 – Jakarta Globe

Bahrain’s bond risk surged to the highest in almost three years amid opposition calls to escalate the conflict with the government ahead of the Feb. 14 anniversary of anti-regime riots.

Renewed political unrest may hurt the government’s efforts to revive the economy and win investors back after growth slowed and Standard & Poor’s and Moody’s Investors Service cut the island kingdom’s credit ratings last year. Any escalation of anti-government protests would be “destructive” for the economy and security, according to comments from the Bahrain Chamber of Commerce & Industry on the state-run Bahrain News Agency last Tuesday.

“Bahrain’s public finances are weaker than elsewhere in the Gulf,” Liz Martins, a Dubai-based senior economist for the Middle East at HSBC Holdings, said by e-mail. “Growth is much slower since the political unrest last year and there is some sense that the issues that came to the fore then haven’t been resolved. This could constrain risk appetite in 2012, among companies, consumers and investors alike.”

The cost to insure Bahrain’s debt against non-payment for five years jumped as much as 47 basis points this year to 430 on Jan. 30, the highest since May 2009, according to data provider CMA, which is owned by CME Group. It was at 397 at the end of last week. …more