The Ministry of Finance (MoF) of the UAE, in partnership with the Central Bank of the UAE (CBUAE), has released the results of the first auction of the Islamic Treasury Sukuk (T-Sukuk) in dirham denomination. The benchmark auction size was AED 1.1B, and it is part of the T-Sukuk issuance programme for 2023. The auction received bids worth AED 8.3B from eight primary bank dealers, resulting in an oversubscription of 7.6 times.
The demand was high for both tranches, and the final allocation was AED 550M for each of the two-year and three-year tranches, bringing the total issuance to AED 1.1B, according to WAM. According to His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai and Deputy Prime Minister and Minister of Finance of the UAE, the prosperous start of the T-Sukuk auction is a testament to the UAE’s careful and well-considered investment policies and objectives. It showcases the country’s continuous efforts to establish itself as a leading global investment destination, and one of the most advanced and competitive economies globally, specifically in the Islamic economy sector.
H.H. Sheikh Maktoum bin Mohammed said: “T-Sukuk issuances will offer high-quality Islamic assets at competitive prices due to the increase in the investor base, which reflects positively on the country’s economy and investment environment.”
The success of the T-Sukuk auction reflects the trust of investors in the UAE’s investment structure and local economy. The prices of the T-Sukuk were competitive and comparable to US Treasuries with similar maturities. The auction will soon be listed on Nasdaq Dubai to promote secondary market trading, and the program was developed using the Dutch Auction system to ensure transparency and adherence to global sukuk structuring practices. The T-Sukuk program will offer secure investment alternatives, contributing to the growth of the UAE’s investment environment.
During the auction, the lowest bid for the two-year tenure was 3.90%, and the weighted average bids were 3.96%, with the final uniform coupon rate fixed at 3.97%. The lowest bid for the three-year tenure was 3.62%, and the weighted average bids were 3.66%, with the final uniform coupon rate fixed at 3.70%. The initial issuance plan includes tenures of 2, 3, and 5 years, with a 10-year tenure to be added later. Subsequent periodic auctions will follow as part of the proposed 2023 issuance plan.
