Finance Ministry Secures AED 1.1 Billion through Successful Islamic Treasury Bond Sale, Demand Exceeding Anticipated Levels
The United Arab Emirates (UAE) has made a significant stride in its economic growth and leadership in Islamic finance with the successful auction of UAE Dirham-denominated Islamic Treasury Sukuk (T-Sukuk). The auction, conducted by the Ministry of Finance (MoF) and the Central Bank of the UAE (CBUAE), raised AED 1.1 billion.
The T-Sukuk program, a crucial part of the UAE's strategy to develop its Islamic finance framework, played a vital role in building a Dirham-denominated yield curve. This is essential for establishing a robust financial market, providing secure investment instruments for a wide range of investors.
The auction was oversubscribed by 5.6 times, indicating robust demand. Eight primary dealers participated, with total bids reaching AED 6.12 billion. The issuance was split across two tranches, maturing in May 2027 and September 2029.
The first tranche offers a competitive yield of 3.83%, while the second tranche offers a competitive yield of 3.93%. These yields reflect tight spreads of 5 and zero basis points over comparable US Treasuries, highlighting the attractiveness and market-driven pricing of the instruments.
The T-Sukuk program contributes to the UAE’s long-term economic sustainability and growth objectives by reinforcing the local debt capital market and broadening the investment landscape. It also enhances investment options in line with Islamic principles, catering to the growing demand for Shariah-compliant financial instruments.
The program supports liquidity management for local and regional financial institutions, ensuring that these entities have access to stable and secure funding options. It is a significant initiative in the UAE's mission to enhance its standing in the global financial market.
The strong demand and oversubscription indicate continued investor confidence in the UAE's economic fundamentals and its Islamic finance framework. Enhancing financial infrastructure through the T-Sukuk program supports the UAE's fiscal sustainability goals.
The T-Sukuk program is a key component of the UAE's broader strategy to strengthen the local debt capital market. It is also a significant step in the UAE's aim to promote financial inclusion and diversification. The program is part of the UAE's effort to maintain its leadership in Islamic finance, reinforcing its vision of economic diversification and enhancing its reputation as a hub for Sharia-compliant financial activities.
In conclusion, the UAE's successful T-Sukuk auction is a testament to the country's commitment to economic growth, financial stability, and its leadership in Islamic finance. The program offers secure, Sharia-compliant investment options to a diverse investor base, contributing to the UAE's efforts to offer a wider range of investment opportunities.
The T-Sukuk program's success in increasing competition and offering secure investment instruments for a diverse array of investors contributes to the UAE's commitment to long-term economic sustainability and growth. This collaboration between the Ministry of Finance and the Central Bank of the UAE marks a significant stride in the UAE's aim to promote financial inclusion and diversification, reinforcing its leadership in Islamic finance and strengthening its position as a global hub for Sharia-compliant business activities. The oversubscription of the auction suggests continued investor confidence in the UAE's economic stability and its Islamic finance framework, thereby supporting the UAE's mission to expand its debt capital market and offer a wider range of investment opportunities.
