The second auction of UAE’s treasury bonds programme received bids worth Dh9.7 billion and was oversubscribed by 6.5 times, the Ministry of Finance said on Monday.
The strong demand was across both tranches with a final allocation of Dh750 million for the two-year tranche and Dh750 million for the three-year tranche, totalling Dh1.5 billion issued in the second auction.
The auction was part of UAE’s Dh9 billion T-bond issuance programme in 2022.
In May, the first auction of UAE’s treasury bonds received bids worth Dh9.4 billion, oversubscribed 6.3 times.
The securities will be issued initially in 2-, 3-, and 5-year tenures, followed by a 10-year bond at a later date.
The success of the auction is reflected in the attractive market-driven prices, which was achieved by a spread of a 27 bps over US Treasuries for two years, and a spread of 25 bps over US Treasuries for three years.
The T-Bonds program will contribute in building the UAE dirham denominated yield curve, providing safe investment alternatives for investors, strengthening the local debt capital market, developing the investment environment, as well as supporting sustainable economic growth.
What are T-bonds?
T-bonds are fixed-income investment securities offered for subscription for investors. Purchasing T-bonds means lending the federal government (bond issuer) an agreed amount of money for a specific period of time. In return, the investor (bondholder) receives interest payments from the government at regular intervals, known as the ‘coupon’. The bond issuer fulfils its debt obligation once the bond reaches its ‘maturity date’ or the date on which the bond’s principal amount, known as the ‘face value’ or ‘par value’, must be paid in full.
