The UAE’s first auction of Islamic Treasury Sukuk received bids worth Dh8.3 billion, an oversubscription of 7.6 times, it was announced on Wednesday. The benchmark auction size was Dh1.1 billion.
“The success of launching the Islamic Treasury Sukuk auction reflects investors’ confidence in the UAE as a global investment hub and one of the most competitive and advanced economies in the world,” Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai and Deputy Prime Minister and Minister of Finance of the UAE, tweeted on Wednesday.
“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,” he said.
Strong demand was seen across both tranches, with a final allocation of Dh550 million for the two-year tranche, and Dh550 million for the three-year tranche, with a total issuance of Dh1.1 billion.
The first T-Sukuk auction will soon be followed by a listing on Nasdaq Dubai to promote secondary market trading along with primary dealers. The T-Sukuk programme 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 to ensure full transparency in accordance with global best practices for sukuk structuring.
The lowest bid for the two-year tenor was at 3.90 per cent, with the weighted average bids at 3.96 per cent and the final uniform coupon rate fixed at 3.97 per cent. The lowest bid for the three-year tenor was at 3.62 per cent, with the weighted average bids at 3.66 per cent and final uniform coupon rate fixed at 3.70 per cent. The first auction will be followed by a series of subsequent periodic auctions, in line with the proposed 2023 issuance plan.
The UAE Ministry of Finance had last month announced its plan of launching a dirham-denominated Islamic Treasury Sukuk, with a benchmark auction size of Dh1.1 billion. The T-Sukuk is to be initially be issued in 2/3/5-year tenures and followed by a 10-year Sukuk at a later date.
The new Sukuk will also help “enhance the competitiveness of the local financial markets and enable market participants in the UAE to maintain a single, transparent, diversified and sustainable liquidity pool in dirhams”, said Khaled Mohamed Balama, Governor of the Central Bank of the UAE, said earlier.
