First auction of federal treasury bonds achieves bids worth AED 9.4 billion and an oversubscription of 6.3X

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​The United Arab Emirates, represented by the Ministry of Finance (MoF) as the issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and payment agent, has announced the results of the first auction of the dirham denominated federal Treasury Bonds of the Government of the United Arab Emirates (T-Bonds), with a benchmark auction size of AED 1.5 billion (circa USD400 million), which is part of the AED 9 billion T-Bonds issuance program for 2022.

The launch of the AED 1.5 billion UAE T-Bond program witnessed a strong demand through the six primary bank dealers, with bids received worth AED 9.4 billion, and an oversubscription by 6.3 times. The strong demand was across both tranches, with a final allocation of AED 750 million for the two years tranche, and AED 750 million for the three years tranche, with a total issuance of AED 1.5 billion as previously announced.

Commenting on the successful launch of the UAE T-bonds programs, His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, said that the success of the first auction is part of strengthening the UAE's economic competitiveness and supporting the sustainability of economic growth, as the UAE continues to solidify its position as one of the most competitive and advanced economies in the world.

His Highness stressed that this success is reflected in the attractive market driven prices which achieved a spread of 28 bps over US Treasuries for two years, and a spread of 29 bps over the US Treasuries for 3 years, pointing that this successful first issuance is a milestone towards building a dirham denominated yield curve and providing safe investment alternatives for investors which contributes to strengthening the local financial market and developing the investment environment. His Highness also invited international investors to participate in the T-bonds issuance program which is widely open for all eligible investors, and will soon be followed by a listing on Nasdaq Dubai to promote secondary market trading along with primary dealers.

H.H. Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister, Minister of Presidential Affairs and Chairman of the Board of Directors of the Central Bank of the UAE, said: "The success of the first auction of the Federal T- bonds and the strong demand for them, which witnessed an oversubscription by 6.3 times, is a milestone. This reflects confidence in the UAE's economic and financial policies and its future development plans. It also reflects the UAE's position as an attractive hub for investment, its strong creditworthiness and economic and competitive capabilities at the global level.

H.H. added: "The Federal T- bond issuance constitutes a new phase in promoting the robust performance of the UAE's financial sector, providing safe and advanced dirham-denominated investment. It will achieve the objectives of the new Dirham Monetary Framework.

His Highness expressed his thanks and appreciation to all partners, including the Ministry of Finance, and emphasized the importance of collaboration and innovative initiatives to develop the sector and support the country's initiatives and plans.

The T-Bonds program was developed in uniform pricing (the Dutch Auction) for final bid acceptance of bids and final allocation amounts, regardless of the lower-priced bids received to ensure full transparency in accordance with global best practices for bond structuring. The lowest bid for the two-year tenor was at 2.88%, with the weighted average bids at 2.96% and the final uniform coupon rate fixed at 3.01%. The lowest bid for the 3-year tenor was at 2.95%, with the weighted average bids at 3.09% and final uniform coupon rate fixed at 3.24%.

The first auction will be followed by a series of subsequent periodic auctions, in line with the proposed 2022 issuance plan. The T-Bonds will be denominated in UAE dirham to develop the local bonds debt market and to develop the mid-term yield curve. The Securities will be issued initially in 2/3/5 year tenures; followed by a 10-year bond at a later date.

For more information on the T-Bonds, please visit the website https://www.mof.gov.ae/en/FederalDebtManagement/Pages/Default.aspx​

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