First auction of UAE’s federal treasury bonds gets Dh9.4 billion in bids, oversubscribed 6.3 times
Strong demand seen for two-year and three-year dirham bonds at AED 750 million each
The first auction of UAE’s treasury bonds received bids worth Dh9.4 billion and were oversubscribed 6.3 times, the finance ministry said on Wednesday.
The T-bonds, with a benchmark auction size of Dh1.5 billion, are part of a Dh9 billion bond issuance programme for 2022.
Demand was strong across both two-year and three-year tranches, with a final allocation of Dh750 million for each, with the issuance totalling Dh1.5 billion.
The lowest bid for the two-year tenor was at 2.88 per cent, with the weighted average bids at 2.96 per cent and the final uniform coupon rate fixed at 3.01 per cent. The lowest bid for the 3-year tenor was at 2.95 per cent, with the weighted average bids at 3.09 per cent and final uniform coupon rate fixed at 3.24 per cent.
Commenting on the successful launch of the UAE T-bonds programme, Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, said that the success of the first auction is part of strengthening the UAE’s economic competitiveness and supporting the sustainability of economic growth, as the UAE continues to solidify its position as one of the most competitive and advanced economies in the world.
He stressed that the success of the programme is reflected in the prices which achieved a spread of 28 basis points over US Treasuries for two years, and a spread of 29 basis points over the US Treasuries for three years.
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, said: “The success of the first auction of the Federal T-bonds and the strong demand for them is a milestone. This reflects confidence in the UAE’s economic and financial policies and its future development plans. It also reflects the UAE’s position as an attractive hub for investment, its strong creditworthiness and economic and competitive capabilities at the global level.
“The federal T-bond issuance constitutes a new phase in promoting the robust performance of the UAE’s financial sector, providing safe and advanced dirham-denominated investment. It will achieve the objectives of the new Dirham Monetary Framework.”
The first auction will be followed by a series of subsequent periodic auctions, in line with the proposed 2022 issuance plan. The securities will be issued initially in 2-, 3-, and 5-year tenures, followed by a 10-year bond at a later date.