Emirates: The UAE’s treasury sukuk auction received bids totaling 7.83 billion dirhams ($2.13 billion), signaling a promising trajectory for the country’s financial landscape.

Represented by its Ministry of Finance and supported by the state’s central bank as the issuing and paying agent, the Gulf nation has disclosed the outcomes of its Islamic treasury bonds public sale for the first quarter of 2024.

The auction garnered strong demand from eight primary dealers for the three- and five-year tranches of the financial instruments. An oversubscription rate of 7.1 times was announced, according to the UAE news agency WAM.

The sale’s success is underscored by the attractive market-driven prices achieved, with a spread of 4 basis points over comparable US treasuries, as highlighted by sources.

The Islamic treasury sukuk issuance program is poised to bolster the UAE dirham-denominated yield curve, offering secure avenues for investors, fortifying the local debt capital market and fostering a conducive financial climate, as well as contributing to sustainable economic growth.

According to the website of the Finance Ministry, local currency sukuk issuance will help diversify funding sources and minimize dependence on foreign capital markets, adding that the issuance of such financial instruments expands the investor base for local currency sukuk, which helps reduce exposure to rollover and foreign exchange fluctuation risks.

Moreover, the ministry added, it provides the local investors with an opportunity to invest in local government securities in the UAE dirham and provides alternative financing resources for the private sector, as well as banks and financial institutions in the country.