Islamic Treasury Sukuk achieve bids worth AED 8.3 billion and an oversubscription of 7.6x
09 May 2023
The United Arab Emirates, 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, has announced the results of the first auction of the dirham-denominated Islamic Treasury Sukuk (T-Sukuk), with a benchmark auction size of AED 1.1 billion, which is part of the T-Sukuk issuance programme for 2023.
The launch of the AED 1.1 billion UAE T-Sukuk programme witnessed a strong demand through the eight primary bank dealers, with bids received worth AED 8.3 billion, and an oversubscription by 7.6 times. The strong demand was across both tranches, with a final allocation of AED 550 million for the two-year tranche, and AED 550 million for the three-year tranche, with a total issuance of AED 1.1 billion.
UAE is a global investment destination
His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance, mentioned that the successful launch of the T-Sukuk auction reaffirms the prudence of the UAE's investment strategic policies and objectives, as the UAE continues to solidify its position as a global investment destination and one of the most competitive and advanced economies in the world, particularly Islamic economy.
His Highness Sheikh Maktoum bin Mohammed said: “T-Sukuk issuances will offer high-quality Islamic assets at competitive prices due to the increase in the investor base, which reflects positively on the country’s economy and investment environment.”
Investment structure
This success reiterates the confidence enjoyed by investors in the UAE’s investment structure and local economy, which is reflected in the attractive market driven prices that were equivalent to US Treasuries with similar maturities.
The first T-Sukuk auction will soon be followed by a listing on Nasdaq Dubai to promote secondary market trading along with primary dealers. The T-Sukuk programme was developed in uniform pricing (the Dutch Auction) for final bid acceptance of bids and final allocation amounts, regardless of the lower-priced bids received to ensure full transparency in accordance with global best practices for sukuk structuring. These sukuk will provide safe investment alternatives for investors which contributes to developing the UAE’s investment environment.
The lowest bid for the two-year tenor was at 3.90%, with the weighted average bids at 3.96% and the final uniform coupon rate fixed at 3.97%. The lowest bid for the 3-year tenor was at 3.62%, with the weighted average bids at 3.66% and final uniform coupon rate fixed at 3.70%. The first auction will be followed by a series of subsequent periodic auctions, in line with the proposed 2023 issuance plan.
The Sukuk will be issued initially in 2/3/5 year tenures; followed by a 10-year tenor at a later date.
For more information on the T-Bonds, please visit the website:
https://mof.gov.ae/federal-debt-management-office/
