UAE announces second auction of $408 million treasury bonds

In its capacity as the issuer, the UAE Ministry of Finance (MoF) has announced that the second auction of federal treasury bonds (T-Bonds) was held on Monday (June 20), with an auction size of $408 million (AED1.5 billion) distributed over two tranches – a two-year and a three-year one valued at $204 million (AED750 million) each.

The re-opening of bonds will be exercised in this auction to increase the volume of individual bonds issued with the aim of improving liquidity in the secondary market, the ministry said a statement on Sunday.

The first auction of the AED denominated T-Bonds program witnessed a wide turnout from local and international investors, with a total issuance of $408 million (AED 1.5 billion) divided into two tranches of two and three years and a uniform coupon rate fixed at 3.01% and 3.24% respectively.

The success of the first issuance emphasised the UAE’s creditworthiness as one of the world’s most competitive and highly advanced economies, and its position as an investment destination for investors and entrepreneurs, Mohamed Al Hussaini, Minister of State for Financial Affairs, said during the first listing.

“The listings are part of the overall strategy of transitioning to the new economic model within the UAE 50 economic plan, in which the UAE establishes a diversified knowledge-based economy on innovation, entrepreneurship and advanced industries,” he added.

More Auctions

The UAE will continue to implement its plan to issue local bonds for 2022 through more subsequent periodic auctions. In all, the ministry plans to six treasury bonds, each valued $408 million (AED 9 billion). Other tranches will be issued with various tenures for up to five years at later dates throughout the year. Ten-year tranches would be issued at a later time, the ministry said

The conventional T-bonds will be denominated in UAE dirhams to develop the local bonds debt market and ultimately, the aim is to develop the mid-term yield curve, with tranches of two and three years, and in principle of five years as well, while ten-year tranches will be issued at a later time.

UAE Raised $4 billion in 2021

The UAE government raised $4 billion through the issuance of multi-tranche sovereign bonds with a portion of the proceeds earmarked for financing infrastructure projects in October 2021.

That was the first time the government has issued bonds at the federal level to raise fresh funding amid a global low-interest rate environment.

“The UAE issued these bonds to achieve the country’s strategy to build the Treasury yield curve and start issuing in the future Emirati dirham-denominated bonds,” Younis Al Khoori, undersecretary at the Ministry of Finance, said after issuing the sovereign bonds.