The UAE has launched conventional AED denominated Treasury Bonds (T-Bonds) with benchmark auction size of AED1.5 billion ($400 million).
The bonds were launched by the Ministry of Finance (MoF) as the Issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent.
Subject to market conditions, the first auction date to be held in May 2022 is expected to be announced soon, followed by a series of periodical auctions as published in the Issuance Calendar for 2022 on the MoF website.
The conventional T-Bonds will be denominated in UAE dirhams to develop the local bonds debt market, and ultimately, the aim is to help develop the mid-term yield curve.
The Securities will be issued initially in two-, three- and five-year tenures, followed by a 10-year bond later.
These securities will be auctioned and traded
through Bloomberg’s Auction System and settled through a local platform, compliant with international standards, built and operated by Euroclear Bank.
The Ministry of Finance and the UAE Central Bank worked with relevant government entities and international financial bodies to ensure best practice was followed when structuring the T-Bonds, media reports said.
The Ministry has published a robust Primary Dealers code, and on boarded six banks, namely ADCB, Emirates NBD, FAB, HSBC, Mashreq and Standard Chartered, as Primary Dealers to participate in the T-Bonds primary market auction and to actively develop the secondary market.
Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, emphasized that the issuance of the UAE Dirham-denominated T-Bond tranches followed the government’s directives and aligned with international best practice.
“Issuing the T-Bonds in local currency will contribute to building a local currency bond market, diversifying financing resources, boosting the local financial and banking sector, as well as providing safe investment alternatives for local and foreign investors,” he added.
Al Hussaini added that the issuance provides pricing reference for other UAE markets (bond and equity), enhances the ability to cover future funding needs in UAE dirham, and provides opportunities for foreign investors to invest in UAE dirham-denominated bonds.
Commenting on the launch of the T-Bonds programme, Khaled Mohamed Balama, Governor of the CBUAE, said, “With the robust financial market infrastructure developed for the purpose, we are confident that the launch of such a program will enable market participants in the UAE to maintain a transparent, single, diversified and sustainable pool of Dirham liquidity.”