The Central Bank of Bahrain is seen in Manama, Bahrain, October 27, 2013. Bahrain. REUTERS/Hamad I Mohammed
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Franklin Templeton Investments has cut back its debt holdings in Bahrain, citing the "very serious" threat that the cash-strapped nation will experience an economic crisis in the next 12 months if financial aid from neighbors doesn't come through. Templeton's exposure is "much reduced today" because the government seems to lack a credible reform plan, according to Mohieddine Kronfol, the firm's chief investment officer for global sukuk and Middle East and North Africa fixed income.At the same time, he's holding onto a small stake in the nation's bonds, in case Bahrain gets support from its Gulf Arab allies.Bahrain was said to have asked Saudi Arabia, the UAE and Kuwait for financial assistance last year as it sought to replenish foreign reserves and avert a devaluation. Doing away with the peg in Bahrain would raise doubts that other members of the six-nation Gulf Cooperation Council can sustain their currency policies.
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