Exceeded the subscription size by 7.6 times
Islamic treasury sukuk records bids worth AED 8.3 billion
The Ministry of Finance is an issuer of Sukuk. Archival
The first auction of the issuance of Islamic treasury sukuk "T-Sukuk" denominated in UAE dirhams recorded record results, as part of the Islamic treasury sukuk issuance program for the year 2023.
These results come as part of the issuance of Islamic treasury sukuk by the UAE, represented by the Ministry of Finance, as an issuer, and in cooperation with the Central Bank of the UAE as an agent for issuance and payment, of Islamic treasury sukuk, with a standard auction size of AED 1.1 billion.
The launch of the AED 1.1 billion T-Sukuk Islamic Sukuk program recorded strong demand from the eight banks, the main distributors, with bids received worth AED 8.3 billion, exceeding the subscription size by 7.6 times.
Orders for Islamic treasury sukuk were distributed in dirhams across each of the two tranches, with "two-year bonds" achieving AED 550 million, and "3-year bonds" AED 550 million, with a total issuance of AED 1.1 billion.
A global destination
His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, said: "The successful launch of the Islamic Treasury Sukuk auction confirms the correctness of the country's strategic investment policies and objectives, in a way that enhances the UAE's position as a global investment destination and one of the most competitive and advanced economies in the world, especially in the field of Islamic economy."
His Highness said: "Islamic sukuk issuances will provide high-quality Islamic assets at competitive prices, due to the increase in the investor base and attracting a new segment, which enhances the attractiveness and competitiveness of the state, and increases the volume of financial investments, which will reflect positively on the country's economy and the investment environment in the country."
This success reaffirms the high confidence enjoyed by investors in the investment structure in the country and the local economy, which was reflected in the recorded prices, which were equivalent to US Treasuries with similar maturities.
This successful issuance of T-Sukuk will soon be followed by listing on NASDAQ Dubai, promoting trading in the secondary market, along with major distributors.
The Islamic Treasury Sukuk program has been developed at the Unified Pricing (Dutch Auction) for the final acceptance of bids and final allocation amounts, regardless of the lowest priced bids received, in order to ensure full transparency in accordance with international best practices in structuring Sukuk, as these Sukuk will provide safe investment alternatives for all qualified investors, and enhance the investment environment in the country.
The lowest offer for the "two-year sukuk tranche" was 3.90%, with a weighted average bid of 3.96%, and the profit rate for the final vouchers priced uniformly fixed at 3.97%, while the lowest offer for the "3-year sukuk tranche" was at 3.62%, with a weighted average bid at 3.66%, and the profit rate for the final vouchers priced uniformly fixed at 3.70%. A series of subsequent periodic auctions will be held in accordance with the proposed issuance plan for 2023.
These sukuk include tranches ranging from two to three years, and initially five years, followed by the issuance of a 10-year tranche at a later date.
Maktoum bin Mohammed:
• "The successful launch of the Islamic Treasury Sukuk auction strengthens the UAE's position as a global investment destination, and one of the most competitive and advanced economies in the world, especially in the Islamic economy."
• "Islamic Sukuk issuances provide high-quality assets at competitive prices, due to the increase in the investor base and the attraction of a new segment."