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The fourth auction saw the inaugural five-year bond issue, strong demand from six major bank dealers, received bids worth AED8.6b, 5.7x oversubscribed
The new five-year treasury bond will help strengthen local debt capital markets and build a yield curve denominated in UAE dirhams. — file photo
The UAE, with the Ministry of Finance (MoF) as the issuer, in partnership with the Central Bank of the UAE (CBUAE) as the issuing and disbursing agent, announced the fourth planned auction of treasury bonds (T-Bonds), which was announced earlier this year in the treasury bond calendar. Part of the AED9 billion government bond issuance plan for 2022 announced on
The fourth auction, which saw the first five-year bond issue, saw strong demand from six major bank dealers and received bids worth AED8.6b, 5.7 times oversubscribed. Success is reflected in attractive market-driven prices, which are delivered by the two-year Treasury spread of 8 basis points and the five-year Treasury spread of 20 basis points.
Finance Minister Mohammad Hadi Al Husseini said the new five-year treasury bonds will help strengthen local debt capital markets and build a yield curve denominated in UAE dirhams. He added that establishing an active treasury bond trading market would also help improve the efficiency of pricing and capital allocation, supporting the development of broader capital markets. It also provides a safer option for foreign investors to invest in their local currency.
Al Hussaini further noted that the national debt scheme supports the UAE government’s efforts to meet future financing needs. The bonds also help to diversify funding sources and reduce reliance on foreign capital markets as part of the transition to a new economic model.
“The national debt supports the country’s financial and economic policies aimed at achieving comprehensive and sustainable economic development. They also help to promote financial markets and credit structures, create a diverse investment environment, and help make the UAE an ideal investment destination, especially It is because the country enjoys a strong credit rating from international credit agencies, which reinforces its position as the country’s most internationally competitive economy,” he continued.
Khaled Mohamed Balama, Governor of CBUAE, said the issuance of 5-year sovereign bonds in national currency is a high-level framework goal for the UAE to diversify capital market activities, build a UAE dirham-dominated yield curve and achieve the plan and direction of the dirham currency . It also reflects the soundness and stability of the country’s financial system and the confidence of local and international investors, thereby enhancing the UAE’s position as a global financial centre. “
“We are confident in the infrastructure we have built, which will enhance the UAE’s ability to develop the financial sector in line with monetary policy and strategic plans. We are pleased with the positive results achieved in cooperation with the Ministry of Finance in developing financial markets and improving the country’s investment climate, ‘ said Barama.
In May 2022, the UAE, with the Ministry of Finance as the issuer and in cooperation with CBUAE as the issuance and payment agent, issued two- and three-year UAE government dirham-denominated government bonds (T-Bonds).
The Ministry of Finance has designated 6 agency banks as primary dealers to participate in the auction of treasury bonds in the primary market and actively develop the secondary market. The banks are Abu Dhabi Commercial Bank (ADCB), Emirates NBD (ENBD), First Abu Dhabi Bank (FAB), HSBC, Mashreq Bank and Standard Chartered.
The Treasury Department and CBUAE work closely with all relevant government entities and international financial institutions to ensure the application of best international practices in the national debt program.
— muzaffarrizvi@khaleejtimes.com
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