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UAE Issues $400 Million Domestic Treasury Bonds in Dirhams

UAE Issues $400 Million Domestic Treasury Bonds in Dirhams

Thursday, 21 April, 2022 - 09:45
The UAE Ministry of Finance is working to build a local bond market and provide safe investment alternatives for local and foreign investors (WAM)

The UAE has announced the launch of conventional AED denominated Treasury Bonds of the Government of the UAE (T-Bonds), with benchmark auction size of AED1.5 billion ($400 million).

This was conducted through the Ministry of Finance (MoF) as the Issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent.

Subject to market conditions, the first auction date to be held in May 2022 is expected to be announced soon, followed by a series of periodical auctions as published in the Issuance Calendar for 2022 on the MoF website.

The conventional T-Bonds will be denominated in UAE dirhams to develop the local bonds debt market, and ultimately, the aim is to help develop the mid-term yield curve.

The securities will be issued initially in 2/3/5 year tenures; followed by a 10-year bond later.

These securities will be auctioned and traded through Bloomberg’s Auction System and settled through a local platform, compliant with international standards, built and operated by Euroclear Bank.

The Ministry has published a robust Primary Dealers code, and on boarded six banks, namely ADCB, Emirates NBD, FAB, HSBC, Mashreq and Standard Chartered, as Primary Dealers to participate in the T-Bonds primary market auction and to actively develop the secondary market.

Commenting on the announcement of T-Bonds issuance, Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, said "Issuing the T-Bonds in local currency will contribute to building a local currency bond market, diversifying financing resources, boosting the local financial and banking sector, as well as providing safe investment alternatives for local and foreign investors.”

“This issuance will also help build the UAE Dirham-denominated yield curve, thereby strengthening the local financial market and developing the investment environment," he added.

Al Hussaini added that the issuance provides pricing reference for other UAE markets (bond and equity), enhances the ability to cover future funding needs in UAE dirham, and provides opportunities for foreign investors to invest in UAE dirham-denominated bonds (in local currency).

Khaled Mohamed Balama, Governor of the CBUAE, said, "The launch of the T-Bonds program represents another milestone towards the development of a Dirham local market for securities issued by the public sector in the UAE and follows the launch of the Monetary Bills program earlier last year.

With the robust financial market infrastructure developed for the purpose, we are confident that the launch of such a program will enable market participants in the UAE to maintain a transparent, single, diversified, and sustainable pool of Dirham liquidity.”

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