Arab News, Thursday, Mar 16, 2023 | Sha'ban 24, 1444
UAE raises $300m from second auction of T-bonds
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
In 2021, the UAE raised $4 billion through the
issuance of multi-tranche sovereign bonds, the first time it issued bonds at the
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.