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Press Dossier   News Category    Economy    UAE raises $300m from second auction of T-bonds

Arab News, Thursday, Mar 16, 2023 | Sha'ban 24, 1444

​​UAE raises $300m from second auction of T-bonds

Emirates: The UAE has raised 1.1 billion dirhams ($300 million) from the second auction of conventional dirham-denominated treasury bond issuance,
as the second-largest economy in the Middle East region continues to diversify its funding base.  

The auction was conducted by the UAE’s Ministry of Finance as the issuer, in association with the Central Bank of the UAE as the issuing and paying agent, Emirates news agency WAM reported.  

The Ministry of Finance, said on Tuesday, that the sale of the T-bonds was five times oversubscribed.  

Widely considered to be risk-free, T-bonds are fixed-rate government debt securities that pay interest payments twice a year until maturity, according to online financial encyclopedia Investopedia. 

According to the WAM report, this year’s dual-tranche deal received strong investor demand through six primary dealers.

The two and three-year tranches of 550 million dirhams each received bids worth 5.51 billion dirhams. 

“The success is reflected in the attractive market-driven price at the time of the auction; the T-bonds achieved a pricing of 5 to 20 basis points over the applicable US Treasury benchmark with similar maturity,” the Finance Ministry said. 

It added: “This auction followed the practice of reopening the T-bonds, which helps in building up the size of individual bond issues over time and improves liquidity in the secondary market.”  

The report added that the T-Bonds program will
contribute to building the UAE dirham-denominated yield curve, which will ultimately strengthen the local debt capital market, develop the investment environment, provide safe investment alternatives for investors, along with supporting sustainable economic growth.  

For the year 2022, UAE’s Finance Ministry had issued T-bonds worth 9 billion dirhams in total, with two, three and five-year tenors.  

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.  

After the issue of bonds at the federal level, the ministry, at that time, told that the bond package, which was denominated in US dollars, included conventional 10-year and 20-year tranches, as well as 40-year dual-listed Formosa bonds.

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