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UAE to Hold Second Auction of Dirham T-Bonds Worth $408Mln

The UAE will continue to implement its plan to issue local bonds for 2022 through more subsequent periodic auctions. (WAM)
The UAE will continue to implement its plan to issue local bonds for 2022 through more subsequent periodic auctions. (WAM)
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UAE to Hold Second Auction of Dirham T-Bonds Worth $408Mln

The UAE will continue to implement its plan to issue local bonds for 2022 through more subsequent periodic auctions. (WAM)
The UAE will continue to implement its plan to issue local bonds for 2022 through more subsequent periodic auctions. (WAM)

The UAE Finance Ministry said Saturday that a second auction of federal treasury bonds (T-Bonds) would be held on June 20.

The auction size will be AED1.5 billion ($408 million) distributed over two tranches: a two-year tranche valued at AED 750 million and a three-year tranche valued at AED750 million ($204 million).

It explained that the re-opening of bonds will be exercised in this auction to increase the volume of individual bonds issued with the aim of improving liquidity in the secondary market.

The first auction of the AED denominated T-Bonds program witnessed a wide turnout from local and international investors, with a total issuance of AED1.5 billion ($408.3 million) divided into two tranches - of two and three years – and a uniform coupon rate fixed at 3.01% and 3.24%, respectively.

The UAE will continue to implement its plan to issue local bonds for 2022 through more subsequent periodic auctions.

The conventional T-bonds will be denominated in UAE dirhams to develop the local bonds debt market.

It aims to develop the mid-term yield curve, with tranches of two and three years, and in principle of five years as well, while 10-year tranches will be issued at a later time.

The auction, represented by the Ministry of Finance as the issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and payment agent, is part of the AED9 billion ($2.4 billion) T-Bonds issuance program for 2022, the ministry announced in May.

The first auction of the dirham denominated UAE T-Bonds, with a benchmark auction size of AED1.5 billion ($400 million), drew bids worth AED9.4 billion ($2.5 billion), an oversubscription of 6.3 times.

Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, said then that the success of the first auction is part of strengthening the UAE’s economic competitiveness and supporting the sustainability of economic growth.

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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)

Business activity in Saudi Arabia's non-oil sector accelerated to a four-month high in September, driven by strong demand, which led to faster growth in new orders. The Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI), adjusted for seasonal factors, rose to 56.3 points from 54.8 in August, marking the highest reading since May and further distancing itself from the 50.0 level that indicates growth.

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders, alongside challenges in supply. The improvement in business conditions contributed to a significant rise in employment opportunities, although difficulties in finding skilled workers led to a shortage in production capacity.

At the same time, concerns over increasing competition caused a decline in future output expectations. According to the PMI statement, inventories of production inputs remained in good condition, which encouraged some companies to reduce their purchasing efforts.

Growth was strong overall and widespread across all non-oil sectors under study. Dr. Naif Al-Ghaith, Senior Economist at Riyad Bank, said that the rise in Saudi Arabia's PMI points to a notable acceleration in the growth of the non-oil private sector, primarily driven by increased production and new orders, reflecting the sector’s expansionary activity.

Al-Ghaith added that companies responded to the rise in domestic demand, which plays a crucial role in reducing the Kingdom's reliance on oil revenues. The upward trend also indicates improved business confidence, pointing to a healthy environment for increased investment, job creation, and overall economic stability.

He emphasized that this growth in the non-oil sector is particularly important given the current context of reduced oil production and falling global oil prices. With oil revenues under pressure, the strong performance of the non-oil private sector acts as a buffer, helping mitigate the potential impact on the country's economic conditions.

Al-Ghaith continued, noting that diversifying income sources is essential to maintaining growth amid the volatility of oil markets. He explained that increased production levels not only enhance the competitiveness of Saudi companies but also encourage developments aimed at expanding the private sector's participation in the economy.

This shift, he said, provides a more stable foundation for long-term growth, making the economy less susceptible to oil price fluctuations.