Dirham-denominated treasury bonds listed on Nasdaq Dubai

Mohamed Bin Hadi Al Hussaini, Minister of State for Financial Affairs, on Thursday rang Nasdaq Dubai’s market-opening bell to celebrate the listing and circulation of Dhs1.5 billion, as the first Dirham-denominated treasury bonds issued by the UAE Federal Government acting through the Ministry of Finance.

The issuance is part of an ambitious strategy that includes a series of treasury bond issuances to develop the fixed income market in the UAE by providing investors with investment opportunities in sovereign issuances and a proper gauge of yield curve of investments in debt instruments.

The bell ringing ceremony was attended by Ebrahim Alzaabi, Assistant Governor of the Central Bank of the UAE - Monetary Policy and Financial Stability, and Hamed Ali, CEO of Nasdaq Dubai and Dubai Financial Market (DFM), the CEOs for the six participating banks, in addition to other senior officials from the organisations.

The inaugural issuance of the local currency treasury bonds programme witnessed a strong appetite from investors in the region and globally being 6.3 times oversubscribed during the first auction that successfully concluded this week. The Ministry plans to issue 6 treasury bond tranches this year with a total value of Dhs9 billion, where the value of the tranches (2 year and 3 year) in the first auction amounted to Dhs1.5 billion, with a fixed coupon rate of 3.01% and 3.24%, respectively, while other tranches will be issued with various tenures up to 5 years at later dates throughout the year.

Mohamed Bin Hadi Al Hussaini, Minister of State for Financial Affairs noted that the success of the first auction of federal treasury bonds is another step in strengthening the national economy and achieving sustainable economic development, which complements the UAE government’s efforts to enhance and develop the financial and investment market. This issuance conveys the UAE’s creditworthiness as one of the most competitive and highly advanced economies in the world.

He noted that the demand for treasury bonds confirms the position and confidence that the UAE enjoys as an ideal investment destination for investors and entrepreneurs in the region, given its comprehensive infrastructure and logistics. He said: “The Federal Treasury Bond Program contributes to revitalising the local financial and banking sector and providing alternative financing opportunities for investors, in addition to reflecting the strength of economic development indicators, the stability of the financial system and the resilience of the economy. The national economy will continue its momentum and leadership during the next phase in the context of transitioning to the new economic model within the UAE 50 economic plan, in which the UAE establishes a diversified knowledge-based economy on innovation, entrepreneurship and advanced industries.”

Khaled Mohamed Balama, Governor of the Central Bank of the UAE, said: “The launch of the dirham-denominated T-Bonds reflects the UAE’s commitment to develop capital market activities and position it as a global financial hub. It also affirms the resilience and stability of the UAE’s financial system and the confidence of local and international investors in the country’s capability to develop the financial sector according to monetary policies and strategic plans.”

Hamed Ali, CEO of Nasdaq Dubai and Dubai Financial Market (DFM), said: “Nasdaq Dubai is pleased to actively contribute in realising the strategic objectives of the UAE Government to develop the debt capital markets in the country. This milestone issuance and listing underline the strategic commitment to reinforce the capital markets’ activities in the country, particularly the debt market, by developing a government bond market. The second bond listing from the UAE federal Government underscores the Government’s confidence in Nasdaq Dubai’s comprehensive infrastructure that has created a world-class marketplace for the issuance and listing of fixed income instruments from sovereign and commercial issuers in the UAE and globally.”

The Ministry of Finance had listed $4 billion bonds as its inaugural sovereign bonds issuance on Nasdaq Dubai in October 2021. Today’s treasury bond listing reinforces Nasdaq Dubai’s position as the leading venue for domestic and international fixed income listings in the Middle East with a total value of $102 billion. Six agent banks have been appointed by the Ministry of Finance as primary dealers for participants in the primary market auction of the T-bonds and to actively develop the secondary market which include Abu Dhabi Commercial Bank (ADCB), Emirates NBD Bank (ENBD), First Abu Dhabi Bank (FAB), HSBC, Mashreq Bank, and Standard Chartered.

 Nasdaq Dubai is the international financial exchange serving the region between Western Europe and East Asia. It welcomes regional as well as global issuers that seek regional and international investment. The exchange currently lists shares, derivatives, Sukuk (Islamic bonds), conventional bonds and Real Estate Investment Trusts (REITS).