The new five-year T-bonds will help strengthen the local debt capital market and build a yield curve denominated in UAE dirhams.
The UAE, represented by the Ministry of Finance (MoF) as an issuer, in cooperation with the UAE Central Bank (CBUAE) as an issuer and payment agent, announced the results of the fourth auction of the Treasury Bonds Program (T-Bonds), which is part of the 9 billion dirhams T-Bond Issue Program for 2022.
The fourth auction, at which five-year T-bonds were issued for the first time, demonstrated high demand from six primary bank dealers, while applications were received in the amount of 8.6 billion dirhams and an oversupply of 5.7 times, according to the state news agency WAM.
The results are reflected in attractive market prices, which were achieved due to a spread of eight basis points (bp) on US Treasury bonds for two years and a spread of 20 bp on US Treasury bonds for five years.
Mohammed Hadi Al-Husseini, Minister of State for Financial Affairs, said that the new five-year T-bonds will help strengthen the local debt capital market and build a yield curve denominated in UAE dirhams. He added that the creation of an active market for trading T-bonds also contributes to improving the efficiency of pricing and capital allocation and supports the development of a broader capital market. It also provides foreign investors with safer alternatives to invest in local currency.
“T-bonds support the country's financial and economic policy aimed at achieving comprehensive and sustainable economic development. They also help stimulate the financial market and credit structure, as well as create a multi-investment environment that contributes to the transformation of the UAE into an ideal place for investment, especially given that the country has a high credit rating of international credit agencies, which has strengthened its position as one of the most competitive economies at the international level,” Al Husseini said.
Khaled Mohammed Balama, Managing Director of CBUAE, explained: “The issue of five-year T-bonds in the national currency is an advanced stage in the UAE's plans and directions for diversifying activities in the capital markets, building a yield curve dominated by the UAE dirham, and achieving the objectives of monetary policy in dirhams.
“We are confident in the infrastructure we have created that will enhance the UAE's ability to develop the financial sector in accordance with monetary policy and strategic plans. We are pleased with the positive results of our partnership with the Ministry of Finance in developing the financial market and improving the investment environment in the country.”
In May, the UAE, represented by the Ministry of Finance as an issuer, in cooperation with CBUAE as an issuer and payment agent, issued dirhams-denominated T-bonds of the UAE Government (T-Bonds) for two and three years. The Ministry of Finance has appointed six agent banks as primary dealers for participants in the auction for the placement of government bonds on the primary market and for the active development of the secondary market. These banks are Abu Dhabi Commercial Bank, Emirates NBD, First Abu Dhabi Bank, HSBC, Mashreq Bank and Standard Chartered.
The Ministry of Finance and CBUAE worked closely with all relevant government agencies and international financial organizations to ensure the application of international best practices in the T-Bonds Program.
In other news, it should be noted that in June, the UAE announced the issuance of base-sized bonds denominated in US dollars in two tranches.
0 comments