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Its economy is 5 percent the size of Saudi Arabia's, but analysts are betting the kingdom won't let its neighbor's financial woes morph into a Gulf crisis. Bahrain, one of the most vulnerable economies in the Gulf Cooperation Council to political instability and oil-price swings, sought financial support from Saudi Arabia and the United Arab Emirates to replenish its foreign reserves and avert a currency devaluation, according to two people with knowledge of the issue. Bahrain 12-month forward contracts jumped Wednesday by the most in more than a year, while its dollar bonds fell for a second day.The yield on Bahrain's $1.5 billion Eurobonds due 2022 rose seven basis points, the most in two months, after Bloomberg News reported the talks Wednesday.Gulf central banks, including Bahrain's, have repeatedly brushed aside talk of abandoning their exchange-rate regimes.Bahrain's debt risk, measured by five-year credit default swaps, has dropped 60 basis points to 242 as of Wednesday, according to CMA data compiled by Bloomberg.
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