UAE announces the launch of AED-denominated Treasury Bonds

Bonds valued at 1.5 billion dirhams
UAE announces the launch of AED-denominated Treasury Bonds
Five-hundred-dirhams bills

The UAE, represented by the Ministry of Finance (MoF) as the Issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent, announced the launch of conventional AED denominated Treasury Bonds of the Government of the United Arab Emirates (T-Bonds), with benchmark auction size of AED 1.5 billion (circa USD 400 million).

On its Twitter account, UAE’s MoF stated that the Securities will be issued initially in 2/3/5 year-tenures; followed by a 10-year bond at a later date.

According to the ministry, issuing bonds in local currency would contribute to boosting national economic growth and diversifying financing sources. It will also help minimize reliance on foreign capital markets and create alternative financing alternatives for the country’s private sector, banks, and financial institutions.

This issuance will also help develop a bond market in the local currency, and ultimately the aim is to help establish the mid-term yield curve.

According to the Emirates News Agency (WAM), the first auction will take place in May 2022, depending on market conditions.

A series of periodic auctions will follow, in accordance with the proposed issuance plan for 2022, which will be published on MoF’s website.

The securities will be auctioned and traded through Bloomberg’s Auction System and settled through a local platform, compliant with international standards, built and operated by Euroclear Bank.

MoF and the CBUAE worked with relevant government entities and international financial bodies to ensure best practice was followed when structuring the T-Bonds.

The Ministry has published a robust Primary Dealers code and onboarded six banks namely ADCB, Emirates NBD, FAB, HSBC, Mashreq and Standard Chartered as Primary dealers to participate in the T-Bonds primary market auction and to actively develop the secondary market.