Strong Demand for UAE’s Islamic Treasury Sukuk Program: AUD $6.76 billion Subscribed in Third Quarter of 2024

The Islamic Treasury Sukuk Program for the third quarter of 2024 has been met with a significant amount of interest from investors. The Ministry of Finance and the Central Bank of the UAE recently released the outcomes of the auction for “T-Sukuk” denominated in dirhams. This information was made available on the Ministry’s website.

The auction attracted bids totaling AED 6.76 billion, which was well above the subscription volume by 6.1 times. There was notable interest from eight primary distributor banks for both the 3- and 5-year tranches. The success of the auction is evident in the 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 the time of issuance, highlighting the strong demand and positive market response to these securities.

The issuance of local currency Islamic Treasury bonds helps establish a yield curve in UAE dirhams, offering secure investment opportunities for investors. This enhances the competitiveness of local debt capital markets and supports sustainable economic growth by improving investment climate and overall financial stability in UAE dirhams.

Overall, this auction highlights that there is strong demand and positive market response to Islamic Treasury Sukuk Program, providing a platform for investors to invest in local currency bonds that are shariah compliant while ensuring financial security and stability in UAE dirhams.

The Ministry’s statement said that “the successful outcome of this auction demonstrates our commitment towards promoting stable economic growth through transparent financing mechanisms.” It added that “the issuance program will continue to provide investors with secure investment opportunities while supporting sustainable economic development in line with our national strategy.”