UAE sets yearly profit rate of 5.06% for investing in its second retail T-Sukuk

Dubai: UAE residents will be able to invest in the government’s second Sovereign Retail T-Sukuk from September 23, with the five-year investment offering an annual profit rate of 5.06 per cent.

The Ministry of Finance said on Tuesday that subscriptions will remain open until September 28. The government is targeting an issuance size of Dh50 million, while the minimum amount individuals can invest is Dh1,000.

The Shariah-compliant investment is open to retail investors, including UAE citizens and residents, and is backed by the UAE Government.

Investors will receive profit distributions twice a year. The 5.06 per cent annual profit rate, set in line with prevailing market conditions, is higher than the 4.30 per cent offered on the first issuance, though the new sukuk has a longer five-year tenor, compared with two years for the first.

When will sukuk start trading?

After subscriptions close on September 28, allocations are scheduled to take place on September 29. The sukuk will be issued on September 30, with any excess subscription funds due to be refunded by that date.

Trading is then scheduled to begin on Nasdaq Dubai on October 1, allowing investors to buy and sell the sukuk on the secondary market after listing.

Retail investors who do not already have an Investor Number, or NIN, will first need to obtain one before submitting their subscription.

Applications can be made through the DFM eIPO platform, iVestor app and DFM app, as well as through the digital channels of participating banks.

Emirates NBD will act as the lead receiving bank. Emirates Islamic, Abu Dhabi Islamic Bank, Ajman Bank, Mashreq, Abu Dhabi Commercial Bank and First Abu Dhabi Bank will also accept subscriptions.

What does 5.06% return mean?

The sukuk has a five-year tenor and pays an annual profit rate of 5.06 per cent, with payments made every six months.

For example, a Dh10,000 investment would correspond to Dh506 in annual profit at the stated rate, or Dh253 every six months, before considering any applicable terms or charges. Over five years, that would amount to Dh2,530 in profit if the investor holds the sukuk throughout the period and the stated profit payments are made as scheduled.

The minimum Dh1,000 subscription lowers the entry point for individuals seeking exposure to a UAE sovereign investment instrument.

Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs, said the second issuance builds on investor demand generated by the inaugural offering and is intended to strengthen retail access to government investment products.

He said the digital subscription process was designed to provide investors with a clear route from their initial application through to secondary-market trading.

The programme forms part of the Ministry of Finance’s strategy to develop the UAE’s dirham-denominated capital markets and broaden the domestic investor base.