Treasury bills (T-bill) or bonds (T-bond)
The UAE has been seeding the market with dirham-denominated bonds, which will create depth to the financial marketplace. Image Credit: Shutterstock

There has been an uptake in interest in treasury bills and bonds in the UAE and the wider region. Earlier this year, the first auction of the UAE’s dirham-denominated treasury bonds for the year was oversubscribed by 6.2 times, receiving bids worth Dh6.85 billion.

Why this sudden interest you ask?

Traditionally, bills and bonds are often considered safe and stable, making them a popular choice for investors looking to protect their wealth over the long term. Keeping in with the global trend, the UAE announced the launch of a T-bonds issuance program last year to build a local currency bond market and diversify its financial resources.

Diversifying financial goals

When it comes to investment strategies, diversification is crucial. While bonds and treasury bills are often seen as a way to protect against inflation, there is a possibility for inflation to surpass the interest rate on these bonds. As a result, these bonds may only partially shield you from inflation. Nonetheless, investing in bonds and treasury bills can still offer a fixed rate of return typically higher than inflation, allowing the investment to grow over time and provide a dependable source of income that can help mitigate the impact of rising prices. By researching and equipping oneself, investors can make informed decisions to enhance their financial portfolios and achieve long-term investment goals.

Understanding bonds

Bonds are debt instruments issued by governments, municipalities, and corporations to raise capital. When an investor purchases a bond, they are essentially lending money to the issuer in exchange for regular interest payments and the return of the principal amount at maturity. Bonds are known for their fixed-income nature and are typically considered less risky than stocks.

Government bonds are considered one of the safest investment options. They provide a steady income stream and are backed by the government’s ability to tax and print money. These are often categorized into Treasury bonds, Treasury notes and Treasury bills, differing in terms of maturity and interest payment frequency.

Corporate bonds offer higher yields compared to government bonds but come with a higher level of risk. Investors should evaluate the creditworthiness of the issuing company before investing in corporate bonds. Credit ratings provided by agencies can help assess the risk associated with a particular corporate bond.


First and foremost, these investments provide a stable income stream through regular interest payments. They also act as a hedge against market volatility, as their fixed-income nature offers more stability compared to equity investments. Bonds and bills are suitable for investors seeking capital preservation and income generation.

Understanding what works for you

In 2021, the UAE raised $4 billion through the issuance of multi-tranche sovereign bonds, the first time it issued bonds at the federal level. When investing in bonds and bills, there are several key factors to consider. These include:

Risk and return

Government bonds are generally considered low-risk, while corporate bonds carry higher risk. Investors should evaluate the risk profile and potential returns before making investment decisions.

Time horizon

Consider the investment time horizon, as bonds and bills have different maturity periods. Treasury bills are short-term investments, while government and corporate bonds can have longer durations.

Interest rates

Changes in interest rates can impact the value of bonds and bills. When interest rates rise, the value of existing bonds may decrease. Conversely, falling interest rates can lead to an increase in bond prices. Investors should consider the prevailing interest rate environment when making investment choices.


It is essential to diversify bond and bill investments across different issuers, sectors, and maturities. Diversification helps mitigate risks associated with specific bonds or bills and enhances the overall stability of the investment portfolio.

Now that you know what bills and bonds are, and how they can work for you as part of your diversified portfolio, here are a few ways to get started:

1. Purchasing through a broker or trading app: Investors can buy bonds and bills through a brokerage firm or a user-friendly trading app. These platforms provide access to a wide range of bond options, allowing investors to select bonds that align with their risk tolerance and financial goals.

2. Investing via ETFs: Exchange-Traded Funds (ETFs) that focus on bonds and bills offer a convenient way to gain exposure to a diversified portfolio of bonds. By purchasing shares of the ETF, investors indirectly invest in a broad range of bonds, benefitting from diversification and professional management.

3. Buying directly from the issuer: In some cases, individuals have the opportunity to buy bonds directly from the issuer, bypassing intermediaries. This option is more common for larger bond issuances, but some issuers also offer smaller denominations that are accessible to the general public.

Investing in bonds and bills provides investors with stability and income generation opportunities. By understanding the fundamentals, considering risk and return, and diversifying investments, individuals can benefit from these fixed-income securities and achieve their financial goals while maintaining a balanced and diversified portfolio.