UAE’s Treasury Sukuk Auction Sees Strong Demand, Signals Promising Financial Future
In a remarkable turn of events, the UAE’s treasury sukuk auction has garnered bids totaling a whopping 7.83 billion dirhams ($2.13 billion), showcasing a bright future for the country’s financial landscape.
Led by the Ministry of Finance and backed by the state’s central bank as the issuing and paying agent, the Gulf nation has unveiled the results of its Islamic treasury bonds public sale for the first quarter of 2024.
The auction witnessed robust interest from eight primary dealers for the three- and five-year tranches of the financial instruments, leading to an oversubscription rate of 7.1 times, as reported by the UAE news agency WAM.
The success of the sale is emphasized by the market-driven prices achieved, with a spread of 4 basis points over comparable US treasuries, according to sources.
The Islamic treasury sukuk issuance program is set to strengthen the UAE dirham-denominated yield curve, providing secure investment opportunities for stakeholders, bolstering the local debt capital market, and creating a favorable financial environment to support sustainable economic growth.
The Finance Ministry’s website highlights that local currency sukuk issuance will diversify funding sources and reduce reliance on foreign capital markets. Additionally, the issuance of such financial instruments will expand the investor base for local currency sukuk, mitigating risks related to rollover and foreign exchange fluctuations.
Furthermore, the ministry points out that local investors will have the chance to invest in UAE dirham-denominated government securities, offering alternative financing options for the private sector, banks, and financial institutions in the country.