UAE’s five-year tranche treasury bonds receive bids worth Dhs8.6bn in fourth auction

The UAE, represented by the Ministry of Finance (MoF) as the issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent, announced the results of the fourth auction of the Treasury Bonds programme (T-Bonds), which is part of the Dhs9bn T-Bond issuance programme for 2022.

The fourth auction, which saw the first issuance of five-year T-Bonds witnessed a strong demand through the six primary bank dealers, with bids received worth Dhs8.6bn, and oversubscription of 5.7 times, according to the state news agency, WAM.

The performance is reflected in the attractive market-driven prices, which was achieved by a spread of eight basis points (bps) over US Treasuries for two years, and a spread of 20 bps over US Treasuries for five years.

Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, stated that the new five-year T-Bonds will contribute to strengthening the local debt capital market and building the UAE dirham-denominated yield curve. He added that establishing an active market for trading the T-Bonds also contributes to raising the efficiency of pricing and capital allocation and supports the development of the broader capital market. It also provides safer alternatives for foreign investors to invest in local currency.

“The T-Bonds support the country’s financial and economic policies aimed at achieving comprehensive and sustainable economic development. They also help boost the financial market and credit structure, and create a multi-investment environment that contributes to making the UAE an ideal investment destination, particularly as the country enjoys a strong credit rating by international credit agencies, which has cemented its position as one of the most internationally competitive economies,” Al Hussaini said.

Khaled Mohamed Balama, Governor of the CBUAE, explained, “The issuance of five-year T-Bonds in the national currency is an advanced stage in the UAE’s plans and directions towards diversifying capital markets activities, building the UAE dirham dominated yield curve, and achieving Dirham Monetary Framework objectives.

“We are confident in the infrastructure we established, which would enhance the UAE’s capability to develop the financial sector in accordance with monetary policies and strategic plans. We are pleased with the positive outcome of our partnership with the Ministry of Finance in developing the financial market and improving the country’s investment environment.”

In May, the UAE, represented by the MoF as the issuer, in collaboration with the CBUAE as the issuing and payment agent, issued the dirham-denominated T-Bonds of the UAE government (T-Bonds), in two and three-year tenures. Six agent banks have been appointed by the MoF as primary dealers for participants in the primary market auction of the T-Bonds and to actively develop the secondary market. These banks are Abu Dhabi Commercial Bank, Emirates NBD, First Abu Dhabi Bank, HSBC, Mashreq Bank and Standard Chartered.

The MoF and the CBUAE worked closely with all relevant government entities and international financial bodies to ensure the application of best international practices in the T-Bonds Programme.

In other news, in June, the UAE announced that it will issue dual-tranche US dollar-denominated benchmark size bonds.

Read: UAE to issue dollar-denominated dual-tranche sovereign bonds