The first auction of the UAE Treasury Bond (T-Bond) program in 2023 witnessed a strong demand through the six primary bank dealers, with a total of 1.1 billion dirhams for issuance and bids received worth 6.85 billion dirhams, and an oversubscription by 6.2x, according to data released by the UAE Ministry of Finance (MoF) as the issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent.
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The strong demand was across both tranches with a final allocation of 550 million dirhams for the 2-year tranche and 550 million dirhams for the 5-year tranche. The success is reflected in the attractive market driven price, which was achieved by a spread of a 10 bps for the 2-year tranche, and a spread of 15 bps over for the 5-year tranche – both over the applicable US Treasury benchmark. This auction followed the practice of re-opening the T-Bonds which helps in building up the size of individual bond issues and improve liquidity in the secondary market.
The T-Bonds program contributes to building the UAE-dirham-denominated yield curve, strengthening the local debt capital market, developing the investment environment, providing safe investment alternatives for investors, as well as supporting sustainable economic growth.
In 2022, MoF issued T-bonds aggregating to 9 billion dirhams across tenors of 2 years, 3 years, and 5 years.
In 2021, the UAE raised $4 billion through the issuance of multi-tranche sovereign bonds, the first time it issued bonds at the federal level.
The bond package, which is denominated in US dollars, included conventional medium and long-term 10 and 20-year tranches, as well as 40-year dual-listed Formosa bonds, the ministry said at the time.
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