Federal Debt Management Office
T-Bonds: Local Currency Bond Issuance
With the UAE’s thriving economy and strong credit standing from major international rating agencies, the bonds issued by the federal government offer opportunities for local, regional, and global investors who are looking to diversify their investment portfolio.
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Objective
Federal Treasury bonds (T-Bonds) are domestic bonds issued by the federal government of the UAE denominated in the Emirati Dirham (AED). The primary objective of local currency bond issuance is to develop the UAE yield curve which plays an important role in providing a benchmark and reference index for various financing operations of the federal government, including long term mortgage interest rates and capital projects. The yield curve shows the interest rates of bonds on different maturities and indicates the expected return on the invested capital over different investment terms.
Local currency bond issuance will help diversify funding sources and minimise dependency on the foreign capital markets; expand the investor base for local currency bonds which helps reduce exposure to rollover and foreign exchange fluctuation risks; provide the local investors with an opportunity to invest in local government securities in the UAE dirham; and provide alternative financing resources for the private sector, as well as banks and financial institutions in the UAE.
T-Bonds Process
T-Bonds are fixed-income investment securities offered for subscription for investors. Purchasing T-Bonds means lending the federal government (bond issuer) an agreed amount of money for a specific period of time. In return, the investor (bondholder) receives interest payments from the government at regular intervals, known as the ‘coupon’. The bond issuer fulfils its debt obligation once the bond reaches its ‘maturity date’ or the date on which the bond’s principal amount, known as the ‘face value’ or ‘par value’, must be paid in full.
01
Issuance of T-Bonds
The government issues T-Bonds. The investor subscribes to the issuance and purchases the bond’s issue price
02
Interest payment to investors
The government makes fixed, periodic interest payments to the investor
03
Repayment of face value
When the bond reaches maturity, the government repays the face value, including outstanding interests
Benefits of building a yield curve in dirham for the UAE economy
Ability to cover future funding needs in own currency
An actively traded government bond market contributes to efficient pricing and capital allocation
An active government securities market develops capital market and provides safe investment assets
Provides opportunities for foreign investors to invest in local currency
Frequently Asked Questions
To provide further information about the UAE government bonds, we have gathered the most frequently asked questions for your reference.
It is a security denominated in AED that constitutes a Public Debt Instrument within the meaning of the Issuing Law.
The objective is to develop the local dirhams debt market and to build a local currency yield curve.
The Government of the United Arab Emirates, acting through the Ministry of Finance of the United Arab Emirates.
The T-Bonds will be initially issued for 2 year and 3 year maturity. This will be followed by 5 year maturity. In the medium to long term, the maturity could extend to 10 year.
The coupon will be fixed (determined by the bids at the auction) and payment will be semi annual.
The T-Bonds are sold at auctions, planned to be held once every six weeks . For specific dates, see our Tentative Auction Issuance Calendar published on our website, which shows auction dates in advance.
Tenders will only be open to Primary Dealers. Other Eligible Investors wishing to participate in an issuance of T-Bonds must do so through a Primary Dealer.
Six recognized domestic and international banks have been appointed as Primary Dealers. They have exclusive right to participate in the competitive tenders of the primary offer and would provide liquidity and price transparency in the Secondary Market.
Any natural or legal person (other than a person subject to sanctions restricting its ability to purchase T-Bonds or similar instruments).
The issuance plan is in line with the medium-term debt strategy covering the next 3 fiscal years.
The proceeds from the issue of the T-Bonds will be applied by the Issuer in accordance with the Issuing Law (UAE Decretal Federal Law No (9) of 2018, Regarding Public Debt).
By visiting the website and additionally by reaching out to federaldmo@mof.gov.ae
Yes, to build up the size of individual bond issues over time and to improve liquidity in the secondary market.
Denomination is AED 100,000; custody services is through i-link Euroclear; electronic auction platform used is from Bloomberg and hosted by the Issuing Agent (Central Bank of UAE); to ensure wide distribution, no single Primary Dealer allotted more than 45% of successful bids.
