Bahrain’s Gulf International Bank hired several banks to make arrangements for the distribution of the U.S. dollar-dominated five-year bonds on Tuesday.
The dollar bonds are issued outside of the U.S. by a foreign company or a government, denominated in U.S. dollars instead of their local currency. In order to attract a wide range of investors, the issued bonds pose a less currency risk for the U.S.-based creditors.
The dollar bonds are liquid which makes institutes sell them easily without any significant change in the prices and are considerably safer than stocks. The bondholders also remained cushioned from bankruptcy. Thus, it is an ideal choice for most banking firms, institutes, and companies.
According to estimates, GIB is 97.2% indirectly owned by Saudi Arabia through its sovereign wealth fund, the Public Investment Fund. They were to organize necessary investor calls in the countries of Europe, Asia, and the Middle-East, to facilitate the issuance. This would set a benchmark and would be in accordance with the market conditions and regulations.
This opens a window for wider participation of investors, larger markets, and lesser risks.