The UAE’s Ministry of Finance (MoF), in collaboration with the Central Bank of the UAE (CBUAE), announced today the results of the Islamic treasury sukuk auction denominated in UAE dirhams, amounting to AED1.1 billion ($299.5 million).
The auction witnessed strong demand from the eight primary dealers for both tranches maturing in August 2028 and September 2029 of the Islamic treasury sukuk, with bids received worth AED7.1 billion ($1.93 billion) and an oversubscription by 6.5 times.
This issuance is part of the Islamic treasury sukuk issuance program for the first quarter of 2025 as published on the Ministry’s website.
UAE builds dirham-denominated yield curve
The success is reflected in the attractive market-driven prices, with a yield to maturity of 4.18 percent for the tranche maturing in August 2028 and 4.21 percent for the tranche maturing on September 2029. This represents a spread of one basis point above U.S. Treasuries with similar maturities at the time of the auction.
The Islamic treasury sukuk issuance program will contribute to building the UAE dirham-denominated yield curve, providing safe investment alternatives for investors, strengthening the local debt capital market, developing the investment environment, as well as supporting sustainable economic growth.
In January, the UAE also raised AED1.1 billion from an Islamic treasury sukuk auction. The auction witnessed strong demand from the eight primary dealers for both tranches maturing in May 2027 and September 2029 of the Islamic treasury sukuk, with bids received worth AED6.91 billion and an oversubscription by 6.3 times.
The Islamic Treasury Sukuk Auction continues to deliver outstanding results, significantly enhancing the investment climate and further consolidating the UAE’s financial standing.
Check February’s results ⬆️#MoFUAE pic.twitter.com/TCtDDPNrwt— وزارة المالية | الإمارات (@MOFUAE) February 26, 2025
GCC debt capital market to grow further in 2025
The GCC region’s debt capital market reached a milestone of around $1 trillion outstanding at the end of November 2024 following an 11 percent year-on-year expansion. In its latest analysis, Fitch Ratings expected the GCC region’s debt capital markets to grow further and for the region to remain among the largest emerging-market dollar debt issuers in 2025 and 2026, excluding China.
However, debt capital market development is fragmented across the GCC. Saudi Arabia and the UAE are the most developed, followed by Qatar, Bahrain, and Oman, while Kuwait is the least mature.
In November, Bashar Al Natoor, global head of Islamic finance at Fitch Ratings, said that the UAE’s debt capital markets have demonstrated robust growth with a 13.1 percent year-on-year increase in outstanding debt to $294.4 billion by the end of Q3 2024.
Regionally, the UAE holds the second-largest share of the total GCC outstanding sukuk at 16.2 percent, after Saudi Arabia’s 71 percent share. “This growth underscores the country’s expanding financial landscape and its strategic positioning in the sukuk market. Sukuk had a share of 20 percent of the total DCM in the UAE, with the rest in bonds at end-3Q24,” he added.
