Finance: Offering the first tranche of Islamic treasury bonds for a period of 7 years at a value of 550 million dirhams
ABU DHABI, 22nd February, 2017 (WAM) – Today, the Ministry of Finance, in its capacity as the issuing authority, and in cooperation with the Central Bank of the United Arab Emirates, in its capacity as the issuing and payment agent, announced the offering of the first tranche of seven-year Islamic Treasury Sukuks, “T-Sukuk”, with a value of 550 million dirhams, which is the longest maturity period to be issued within the program to date, in a step that reflects the strategic direction to extend and increase the depth of the UAE dirham yield curve.
The new tranche attracted strong orders amounting to about 3.1 billion dirhams, nearly six times the size of the issue, which confirms investors’ confidence in the strength of the national economy and the strength of the Islamic finance sector.
This came within the framework of the Ministry of Finance’s announcement of the success of the auction of Islamic Treasury Sukuks denominated in UAE dirhams for the month of February, with a total value of 1.1 billion dirhams, within the Islamic Treasury Sukuk Program for the year 2026, as published on the Ministry’s official website.
The auction also witnessed strong demand from the eight primary distributor banks for the two tranches due in May 2030 and February 2033, as the total value of the bids submitted amounted to 5.88 billion UAE dirhams, equivalent to about 5.3 times the issue size (about 6 times the issue size for the new seven-year tranche). This high demand reflects investors’ confidence in the strength of the Islamic finance sector and the strength of the national economy.
The results of the auction showed competitive pricing based on market mechanisms, which was achieved with a return to maturity rate (YTM) of 3.53% for the tranche due in May 2030 and 3.779% for the tranche due in February 2033, at a price lower than the yields of US Treasury bonds for similar maturities for the two tranches at the time of issuance. These sukuks are also listed within the UAE Islamic Treasury Sukuk Program on Nasdaq Dubai, which enhances the ease of access for investors in Secondary market.
It should be noted that Islamic treasury bonds in the local currency work to build the return curve denominated in the UAE dirham, and provide safe investment alternatives for investors, which contributes to enhancing the competitiveness of the local debt capital market, improving the investment environment, and supporting the sustainability of economic growth.
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