The third auction of the United Arab Emirates’ dirham-denominated treasury bonds achieved exceptional results. The bonds were oversubscribed 5.1 times and attracted bids worth AED 7.6 billion. With this result, the UAE has become one of the world’s most important bond markets for the first time in months.
The treasury bonds contribute to increasing the competitiveness of the country across various fields and support the UAE’s financial and economic policies aimed at achieving inclusive and sustainable development. In April this year, the country decided to sell treasury bonds in dirhams in a bid to support the Emirati banking sector and support the country’s financial policies. UAE began selling bonds priced in US dollars in 2021. It sold the first bond, a triple-tranche USD-denominated bond, in October 2021.
The third auction of the treasury bonds was part of the UAE’s AED 9 billion T-bonds issuance program for 2022. A total of AED 1.5 billion was issued in the auction in two tranches of two and three-year notes, valued at AED 750 million each. The UAE was able to achieve this by diversifying sources of income, attracting foreign investments, and building a multi-opportunity investment environment. According to the Ministry of Finance, the success of the auction was reflected in the attractive market-driven prices, which was achieved by a spread of 16 basis points (bps) over US Treasuries for two years, and a spread of 15 bps over US Treasuries for 3 years. These bonds were made available for subscription to investors.
UAE’s Ministry of Finance will continue supporting the UAE’s financial system and offering innovative financial tools that advance national economic development. In the auctions, the UAE is represented by the Ministry of Finance as the issuer and the Central Bank of the UAE (CBUAE) as the issuing and paying agent. The UAE is also seeking to diversify financially in the coming years.
Earlier, the UAE dual-tranche USD dollar bond issuance also achieved an oversubscription by 5x. The Ministry of Finance closed its offering of a USD-denominated dual-tranche sovereign bond package, which consisted of medium and long-term tranches: a 10-year tranche and a 30-year Formosa tranche – valued at USD 3 billion.