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First dirham-denominated bond listed on Nasdaq Dubai

The UAE's first dirham-denominated treasury bond listed on Nasdaq Dubai
  • The inaugural issuance was 6.3 times oversubscribed
  • Listing and circulation of AED1.5 billion
  • Ministry plans to issue six treasury bond tranches this year with a total value of AED9 billion

The UAE’s first dirham-denominated treasury bond was listed on Nasdaq Dubai yesterday.

Mohamed Hadi Al Hussaini, minister of state for financial affairs, today rang Nasdaq Dubai’s market-opening bell to celebrate the listing and circulation of AED1.5 billion as the first Dirham-denominated treasury bonds issued by the UAE Federal Government acting through the Ministry of Finance.

The issuance is part of an ambitious strategy that includes a series of treasury bond issuances to develop the fixed income market in the UAE by providing investors with investment opportunities in sovereign issuances and a proper gauge of yield curve of investments in debt instruments.

The bell-ringing ceremony was attended by Ebrahim Alzaabi, assistant governor of the Central Bank of the UAE – Monetary Policy and Financial Stability, Hamed Ali, CEO of Nasdaq Dubai and Dubai Financial Market (DFM), the CEOs of the six participating banks, and other senior officials.

The inaugural issuance of the local currency treasury bonds programme witnessed a strong appetite from investors in the region and globally being 6.3 times oversubscribed during the first auction that successfully concluded this week.

The Ministry plans to issue six treasury bond tranches this year with a total value of AED9 billion, where the value of the tranches (2 year and 3 year) in the first auction amounted to AED1.5 billion with a fixed coupon rate of 3.01% and 3.24%, respectively. 

In contrast, other tranches will be issued with various tenures for up to five years at later dates throughout the year.

Al Hussaini noted that the success of the first auction of federal treasury bonds is another step in strengthening the national economy and achieving sustainable economic development, which complements the UAE government’s efforts to enhance the financial and investment market.

This issuance conveys the UAE’s creditworthiness as one of the world’s most competitive and highly advanced economies.

He noted that the demand for treasury bonds affirms the position and confidence that the UAE enjoys as an ideal investment destination for investors and entrepreneurs in the region, given its comprehensive infrastructure and logistics.

“The Federal Treasury Bond Programme contributes to revitalising the local financial and banking sector and providing alternative financing opportunities for investors, reflecting the strength of economic development indicators, the stability of the financial system, and the economy’s resilience. The national economy will continue its momentum and leadership during the next phase in the context 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.”

Balama stated that the launch of the dirham-denominated T-Bonds reflects the UAE’s commitment to develop capital market activities and position it as a global financial hub. It also affirms the resilience and stability of the UAE’s financial system and the confidence of local and international investors in the country’s capability to develop the financial sector according to monetary policies and strategic plans.

Ali said this milestone issuance and listing underline the strategic commitment to reinforce the capital markets’ activities in the country, particularly the debt market, by developing a government bond market. 

“The second bond listing from the UAE federal Government underscores the Government’s confidence in Nasdaq Dubai’s comprehensive infrastructure that has created a world-class marketplace for the issuance and listing of fixed income instruments from sovereign and commercial issuers in the UAE and globally.”

The Ministry of Finance had listed US$ 4 billion bonds as its inaugural sovereign bonds issuance on Nasdaq Dubai in October 2021. Today’s treasury bond listing reinforces Nasdaq Dubai’s position as the leading venue for domestic and international fixed income listings in the Middle East, with a total value of US$102 billion.

Six agent banks have been appointed by the Ministry of Finance as primary dealers for participants in the primary market auction of the T-bonds and to actively develop the secondary market, which includes Abu Dhabi Commercial Bank (ADCB), Emirates NBD Bank (ENBD), First Abu Dhabi Bank (FAB), HSBC, Mashreq Bank, and Standard Chartered.