In a significant move for the UAE’s financial landscape, the Ministry of Finance has announced the launch of its first tranche of Islamic Treasury Sukuk (T-Sukuk) with a maturity period of seven years and a total offering of AED 550 million. This initiative marks the longest maturity yet within the program, reflecting a strategic shift to extend and deepen the yield curve of the UAE Dirham. The new Sukuk attracted robust demand amounting to approximately AED 3.1 billion, nearly six times the size of the offering, underscoring investor confidence in the resilience of the national economy and the strength of the Islamic finance sector.
Details of the Sukuk Offering
The issuance of the seven-year Islamic Treasury Sukuk is part of a broader initiative by the Ministry of Finance, which collaborates with the Central Bank of the UAE as the issuance and payment agent. This move follows the recent success of the February auction for Islamic Treasury Sukuk valued at AED 1.1 billion, promoting the program slated for 2026 as outlined on the ministry’s official website. The newly introduced tranche has garnered exceptionally strong interest, reflecting sustained confidence in the local economy.
Investor Interest and Competitive Pricing
The auction attracted vigorous bids from eight major banks participating in both the seven-year Sukuk and the tranches maturing in May 2030 and February 2033. The total value of the bids reached AED 5.88 billion, which is around 5.3 times the offering size—significantly exceeding the new seven-year tranche. This high demand effectively highlights the robust standing of the Islamic finance market, indicating that investors are looking favorably at the projected economic outlook.
Market Performance and Listings
The results of the auction revealed competitive pricing achieved through market mechanisms, with a yield to maturity (YTM) of 3.53% for the tranche maturing in May 2030 and 3.779% for the February 2033 issue—both priced lower than similar U.S. Treasury bonds at the time of issuance. Additionally, these Sukuk are listed on the UAE’s Islamic Treasury Sukuk program at Nasdaq Dubai, facilitating easier access for investors in the secondary market.
Significance of the Islamic Treasury Sukuk
Issuing Islamic Treasury Sukuk in local currency plays a critical role in establishing a broader yield curve denominated in UAE Dirhams. This provides secure investment alternatives for investors, enhancing the competitiveness of the domestic debt capital market and fostering an enriching investment environment. Ultimately, the initiative supports sustainable economic growth by boosting liquidity and instilling confidence among market participants.