The UAE’s fourth auction of the Treasury Bonds program (T-Bonds), which is part of the AED9 billion ($2.45 billion) T-Bond issuance program for 2022, achieved exceptional bidding results.
The auction, which witnessed the first issuance of five-year T-Bonds, saw a strong demand through the six primary bank dealers, with bids received worth AED8.6 billion, and an oversubscription by 5.7x, for a planned AED1.5 billion bonds.
The UAE, represented by the Ministry of Finance (MoF) was the issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent.
The success is reflected in the attractive market driven prices, which was achieved by a spread of 8 bps over US Treasuries for two years, and a spread of 20 bps over US Treasuries for five years.
Mohamed bin 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,” he said.
Khaled Mohamed Balama, Governor of the Central Bank of the UAE, stressed: “The issuance of 5-year T-Bonds in the national currency is an advanced stage in the UAE’s plans and directions towards diversifying capital markets activities, building UAE Dirham dominated yield curve, and achieving Dirham Monetary Framework objectives. It also reflects the robustness and stability of the country’s financial system and the confidence of local and international investors, thus enhancing UAE’s position as a global financial hub.”
He added: “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 - TradeArabia News Service
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