It will be a reference for the pricing of bonds and shares in the UAE markets

The UAE announces the issuance of government treasury bonds amounting to 1.5 billion dirhams

The UAE, represented by the Ministry of Finance, as the issuer, and in cooperation with the Central Bank of the UAE, as the issuing and paying agent, announced the issuance of government treasury bonds “T-Bonds” denominated in the local currency dirham, with a standard auction size of 1.5 billion dirhams (about 400 million US dollars).

And the Ministry of Finance expected, in a statement, to announce soon the exact date of the first auction, which will be held in May 2022, according to market conditions, and a group of subsequent periodic auctions will follow, in line with the proposed issuance plan for 2022, which will be published on the Ministry of Finance website. .

bond market

The government treasury bonds “T-Bonds” denominated in the local currency dirham are building a bond market in the local currency, and developing the yield curve in the medium term as a whole.

These bonds include tranches of varying durations between two and three years, and five years initially, and a 10-year tranche will be issued at a later time.

Offering and Trading

According to the Ministry of Finance, these bonds will be auctioned and traded through the Bloomberg Auction System, and will be settled through a local platform, in accordance with international standards, which was created and operated by Euroclear Bank.

The Ministry of Finance and the Central Bank of the Emirates are working with all relevant government agencies and international financial bodies to ensure the adoption and application of best international practices in structuring these bonds.

Funding sources

Minister of State for Financial Affairs, Muhammad bin Hadi Al-Husseini, said that the issuance of treasury bonds denominated in UAE dirhams came in line with government directions, and in accordance with international best practices in this field.

He added: “The issuance of these bonds in local currency will contribute to building a local currency bond market, diversifying sources of financing, activating the local financial and banking sector, as well as providing safe investment alternatives for local and foreign investors. This issuance will also help build the yield curve denominated in Emirati dirhams, thus strengthening The local financial market, and the improvement of the investment environment in general.

Al-Husseini continued, "The issuance will constitute a reference for the pricing of bonds and shares in the UAE markets, and enhance the ability to cover future financing requirements in the local currency, as well as allow foreign investors to invest in bonds in the local currency."

market development

For his part, the Governor of the Central Bank, Khaled Muhammad Balama, said: “The launch of the (Government Treasury Bond Program) represents a prominent feature towards developing a local market for dirham-denominated securities issued by the public sector in the country, in addition to the cash bills program, which was launched last year. ».

He added: “With the development of the effective infrastructure for the financial markets, we are confident that the introduction of this program will enable dealers in the country to maintain a single, transparent, diversified and sustainable group of liquidity in dirhams, and will also contribute to the implementation of the new monetary framework for the dirham, and support the ongoing work to establish a pricing standard. The risk-free dirham (yield curve), which would stimulate more local market activities.

We at the Central Bank are pleased with the positive outcome of our partnership with the Ministry of Finance, Euroclear and Bloomberg in this regard.”

medium term yield curve

In the same context, the head of the global capital markets sector at Euroclear, Sudeep Chatterjee, said that the issuance of government treasury bonds by the Ministry of Finance comes to create a medium-term yield curve, as a step towards developing the local capital market, which became available thanks to the launch of The innovative and comprehensive platform, the establishment of a short-term yield curve by the UAE Central Bank early last year.

He added, "As a long-term partner of the UAE, we are proud of our continued cooperation with the Ministry of Finance and the Central Bank, to develop the capital market, which will have an impact on other local activities."

proxy banks

The Ministry of Finance published the main symbol of the agent banks, and it includes six banks: Abu Dhabi Commercial, Emirates NBD, First Abu Dhabi, Mashreq, HSBC, and Standard Chartered, as they are the main distributors for the participants. At the initial auction of T-Bonds, they are tasked with developing the secondary market.

Follow our latest local and sports news and the latest political and economic developments via Google news