UAE’s Islamic Treasury Sukuk Program Reveals Strong Demand, Enhances Competitiveness in Local Debt Markets

The Islamic Treasury Sukuk Program for the third quarter of 2024 recently saw the auction of local currency bonds denominated in dirhams. This was a collaboration between the Ministry of Finance and the Central Bank of the UAE. The results of this auction were made public on the Ministry’s website.

During the auction, there was significant interest from eight primary distributor banks for both the 3- and 5-year tranches. A total of AED 6.76 billion in bids were received, which exceeded the subscription volume by an astonishing six times. The success of this auction was evident in competitive market-driven pricing achieved, with a yield to maturity (YTM) of 4.77% for the 3-year tranche and 4.43% for the 5-year tranche. These rates were slightly lower than comparable U.S. Treasury securities at issuance time, demonstrating strong demand and positive market response to this program.

The issuance of local currency Islamic Treasury bonds helps establish a yield curve in UAE dirhams, providing secure investment opportunities for investors. As a result, it enhances competitiveness in local debt capital markets, improves investment climate and supports sustainable economic growth.

In summary, these results highlight strong demand and positive market response to this program, underscoring its importance to promoting stable growth in UAE’s economy through secure investment opportunities provided by local currency Islamic treasury bonds issued under this program.