UAE lists first dirham-denominated treasury bond on Nasdaq Dubai amid strong demand
The UAE’s first dirham denominated treasury bond was listed on Nasdaq Dubai on Thursday.
The Dh1.5 billion ($408 million) issuance was oversubscribed 6.3 times and received bids worth Dh9.4bn amid strong demand from regional and global investors in the first auction this week.
Mohamed Al Hussaini, Minister of State for Financial Affairs, rang the market-opening bell at the exchange to celebrate the listing and circulation of the T-bond issued by the UAE federal government acting through the Ministry of Finance, statenews agency Wam reported.
The Emirates last month announced the launch of a T-bonds issuance programme for 2022, as part of plans to build a local currency bond market and diversify its financial resources.
The ministry plans to issue six treasury bond tranches this year with a total value of Dh9bn, with the value of the tranches (two-year and three-year) in the first auction amounting to Dh1.5bn with a fixed coupon rate of 3.01 per cent and 3.24 per cent, respectively.
Other tranches will be issued with various tenures for up to five years at later dates throughout the year.
“The Federal Treasury Bond Programme contributes to revitalising the local financial and banking sector and providing alternative financing opportunities for investors, reflecting the strength of economic development indicators, the stability of the financial system and the economy’s resilience,” Mr Al Hussaini said.
T-bonds are fixed-rate government debt securities that pay semi-annual interest payments until maturity, according to online financial encyclopaedia Investopedia. They are also considered to be relatively risk-free.
The success of the first issuance emphasises the UAE’s creditworthiness as one of the world’s most competitive and highly advanced economies, and its position as an investment destination for investors and entrepreneurs, Mr Al Hussaini said.
The UAE raised $4bn in October through the issuance of multi-tranche sovereign bonds, marking the first time it issued bonds at the federal level. Listed on Nasdaq Dubai, the US dollar-denominated bond package included conventional medium- and longterm 10- and 20-year tranches, as well as 40-year dual-listed Formosa bonds, the Ministry of Finance said at the time.
The latest T-bond listing increases the value of domestic and international fixed income listings on Nasdaq Dubai to $102bn, the Wam report said.
Six agent banks, including Abu Dhabi Commercial Bank, have been appointed by the ministry as primary dealers for participants in the market auction of the T-bonds.
The Dh1.5bn issuance was subscribed 6.3 times over and received bids worth Dh9.4bn