The Ministry of Finance, in collaboration with the Central Bank of the UAE, recently announced the results of the auction for Islamic Treasury Sukuk (T-Sukuk) denominated in UAE dirhams. The issuance amounted to Dh1.1 billion and is part of the Islamic treasury sukuk programme for the third quarter of 2024. The auction saw strong demand from primary bank dealers for the tranche maturing in May 2027 and the new five-year tranche maturing in September 2029. Bids totaling Dh5.07 billion were received, exceeding the subscription volume by 4.6 times. The competitive market prices achieved had a yield to maturity of 3.67 per cent for the tranche maturing in May 2027 and 3.65 per cent for the tranche maturing in September 2029.
The success of the auction is evident in the competitive market prices achieved, with a yield to maturity of around 3.67 per cent for the tranche maturing in May 2027 and 3.65 per cent for the tranche maturing in September 2029. This demonstrates the strong demand for the T-Sukuk, with bids exceeding the subscription volume by 4.6 times. The spread of 13 to 15 basis points over US Treasury bonds of similar maturities at the time of issuance further highlights the attractiveness of these sukuk to investors. These results reflect the confidence investors have in the UAE market and its ability to provide secure investment opportunities.
The issuance of local currency-denominated Islamic Treasury Sukuk plays a vital role in developing a UAE dirham-denominated yield curve and offering secure investment alternatives for investors. This not only supports the competitiveness of the local debt capital market but also enhances the investment environment and contributes to the sustainability of economic growth. By providing a diverse range of investment options, the UAE aims to attract both local and international investors, further strengthening its position as a leading financial hub in the region.
The collaboration between the Ministry of Finance and the Central Bank of the UAE in issuing Islamic Treasury Sukuk demonstrates the government’s commitment to promoting the growth and development of Islamic finance in the country. By offering sharia-compliant investment opportunities, the UAE aims to attract a wider range of investors and promote financial inclusion. The success of the recent auction highlights the growing demand for Islamic financial products and the government’s efforts to meet this demand through innovative and attractive investment instruments.
Investors looking for secure and competitive investment opportunities in the UAE market can consider the Islamic Treasury Sukuk as a viable option. With competitive market prices and attractive yields to maturity, these sukuk offer a secure investment alternative for both local and international investors. The success of the recent auction further underlines the strong demand for Islamic financial products in the UAE and the government’s commitment to promoting the growth of this sector. By offering diverse investment options, the UAE continues to enhance its position as a leading financial hub in the region.
