UAE’s 5-year tranche Treasury Bonds attract strong demand

The United Arab Emirates, represented by the Ministry of Finance (MoF) as the issuer, in collaboration with the Central Bank of the UAE (CBUAE) as the issuing and paying agent, has announced the results of the fourth auction of the Treasury Bonds programme (T-Bonds), which is part of the Dhs 9 billion T-Bond issuance programme for 2022 as published in the T-Bonds calendar earlier this year.

The fourth auction, which witnessed the first issuance of five-year T-Bonds saw a strong demand through the six primary bank dealers, with bids received worth Dhs 8.60b, and an oversubscription by 5.7x. The success is reflected in the attractive market driven prices, which was achieved by a spread of a 8 bps over US Treasuries for two years, and a spread of 20 bps over US Treasuries for five years.

Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, stated that the new five-year T-Bonds will contribute to strengthening the local debt capital market and building the UAE dirham denominated yield curve. He added that establishing an active market for trading the T-Bonds also contributes to raising the efficiency of pricing and capital allocation and supports the development of the broader capital market. It also provides safer alternatives for foreign investors to invest in local currency.

Al Hussaini further noted that the T-Bonds programme supports the UAE Government’s efforts to cover future financing requirements. These bonds also contribute to diversifying funding sources and reducing dependence on foreign capital markets, as part of the transition to the new economic model.

“The T-Bonds support the country’s financial and economic policies aimed at achieving comprehensive and sustainable economic development. They also help boost the financial market and credit structure, and create a multi-investment environment that contributes to making the UAE an ideal investment destination, particularly as the country enjoys a strong credit rating by international credit agencies, which has cemented its position as one of the most internationally competitive economies,” he continued.

Khaled Mohamed Balama, Governor of the CBUAE, explained, “The issuance of 5-year T-Bonds in the national currency is an advanced stage in the UAE’s plans and directions towards diversifying capital markets activities, building UAE Dirham dominated yield curve, and achieving Dirham Monetary Framework objectives. It also reflects the robustness and stability of the country’s financial system and the confidence of local and international investors, thus enhancing UAE’s position as a global financial hub.”

Balama added, “We are confident in the infrastructure we established, which would enhance the UAE’s capability to develop the financial sector in accordance with monetary policies and strategic plans. We are pleased with the positive outcome of our partnership with the Ministry of Finance in developing the financial market and improving the country’s investment environment.”

In May 2022, the UAE, represented by the MoF as the issuer, in collaboration with the CBUAE as the issuing and payment agent, issued the dirham denominated T-Bonds of the UAE Government (T-Bonds), in two and three year tenures. Six agent banks have been appointed by the MoF as primary dealers for participants in the primary market auction of the T-Bonds and to actively develop the secondary market. These banks are Abu Dhabi Commercial Bank (ADCB), Emirates NBD (ENBD), First Abu Dhabi Bank (FAB), HSBC, Mashreq Bank, and Standard Chartered.

The MoF and the CBUAE worked closely with all relevant government entities and international financial bodies to ensure the application of best international practices in T-Bonds Programme.

Meanwhile, the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), the world’s largest energy industry conference and exhibition, has announced its 2022 conference agenda, reinforcing its position as the leading global forum for advancing a pragmatic and progressive energy transition.

ADIPEC 2022 will showcase industry action towards net-zero commitments and facilitate synergies between global policy makers and decision-makers, energy and business leaders, and innovators to support the development of a sustainable, affordable, and secure energy system. The conference will be a platform to share insights on the latest global issues affecting energy markets, including geopolitical shifts, the evolving global economy, energy supply challenges and next generation energy solutions.

Tayba Al Hashemi, CEO of ADNOC Sour Gas and Chair of ADIPEC 2022, said, “ADIPEC is helping advance a pragmatic and progressive global energy transition. It plays a powerful role supporting industry as they tackle the dual missions of delivering the world’s energy needs of today, while investing in the energy systems of the future. The 2022 agenda reflects the realities of the changing global energy and geopolitical landscapes, with the energy trilemma of balancing cost, sustainability, and security in sharp focus for populations and energy producers around the world.

“When the global industry gathers in Abu Dhabi for ADIPEC 2022, it will be just one week before COP27 in Egypt and one year before COP28 takes place in Abu Dhabi. ADIPEC will provide an important platform for industry to demonstrate the climate action, investment and innovation helping accelerate the transition and deliver decarbonisation.”

WAM