The UAE, indicated by the Ministry of Finance (MoF) as the issuer and the Central Bank of the UAE (CBUAE) as the issuing and payment agent, has revealed the results of the first auction of dirham denominated federal Treasury Bonds of the UAE (T-Bonds), with a benchmark auction size of Dh1.5 billion (approximately $400 million), as part of the Dh9 billion T-Bonds issuance program for 2022.
Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance, stated that the first auction’s success contributes to the UAE’s economic competitiveness and the sustainability of economic growth, as the UAE maintains its position as one of the world’s most competitive and advanced economies.
The start of the Dh1.5 billion UAE T-Bond program was met with high demand from the six principal bank dealers, with bids totaling Dh9.4 billion and a 6.3-fold oversubscription. The high demand was seen across both tranches, with a final allocation of Dh750 million for the two-year tranche and Dh750 million for the three-year tranche, for a total issuance of Dh1.5 billion as originally indicated.
“The success of the first auction of the Federal T-bonds and the strong demand for them, which saw an oversubscription by 6.3 times, is a milestone,” said Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister, Minister of Presidential Affairs, and Chairman of the Board of Directors of the Central Bank of the UAE. This indicates trust in the UAE’s economic and financial policies, as well as its long-term development objectives. It also represents the UAE’s status as an appealing investment location, as well as its excellent creditworthiness and worldwide economic and competitive skills.
“The issuing of Federal T-bonds marks a new milestone in fostering the UAE’s financial sector’s robust performance by enabling safe and advanced dirham-denominated investment.” It will meet the goals of the new Dirham Monetary Framework,” Sheikh Mansour stated.
To guarantee full transparency in compliance with global best practices for bond structuring, the T-Bonds program 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. The two-year tenor received the lowest bid of 2.88 percent, with the weighted average bids at 2.96 percent and the final uniform coupon rate set at 3.01 percent. The lowest bid for the three-year tenor was 2.95 percent, with a weighted average bid of 3.09 percent and a final uniform coupon rate of 3.24 percent.
