His Excellency Mohamed Bin Hadi Al Hussaini, UAE’s Minister of State for Financial Affairs, on Monday, rang the market-opening bell to celebrate and mark the listing of the domestic Dirhams Islamic Treasury Sukuk (T-Sukuk) on Nasdaq Dubai.
The UAE, represented by the Ministry of Finance as the issuer, and in collaboration with the Central Bank of the UAE as the issuing and paying agent, has announced launching dirham-denominated Islamic Treasury Sukuk (T-Sukuk), with a benchmark auction size of Dh 1.1 billion.
The launching of Dirham-denominated Islamic Treasury Sukuk includes a series of issuances to attract a new category of investors and support the sustainability of economic growth. It is aimed at enhancing the UAE’s economic competitiveness by providing high-quality Islamic assets at competitive prices. This will support the Central Bank of the UAE in managing liquidity within the banking sector and boost the size of financial investments. It will reflect positively on the country’s economy, investment environment, per capita income, and gross national income.
Eight primary bank dealers
The inaugural issuance of the Dirham-denominated Islamic Treasury Sukuk programme witnessed a strong demand through the eight primary bank dealers. It received bids worth Dh 8.3 billion, and an over-subscription by 7.6 times. The strong demand was across both tranches, with a final allocation of Dh 550 million for the two-year tranche, and Dh 550 million for three-year tranche with a total issuance of Dh 1.1 billion. Other tranches of Islamic Treasury Sukuk will be issued with various tenures up to five years initially, followed by a 10-year Sukuk at a later date.
The Ministry of Finance has taken on-board eight banks including Abu Dhabi Islamic Bank (ADIB), Dubai Islamic Bank (DIB), Abu Dhabi Commercial Bank PJSC (ADCB), Emirates NBD, First Abu Dhabi Bank (FAB), HSBC, Mashreq, and Standard Chartered as Primary Dealers to participate in the T-Sukuk primary market auction and actively develop the secondary market.
The bell-ringing ceremony was attended by a number of senior officials from the Ministry of Finance, Central Bank of the UAE, Nasdaq Dubai, and the CEOs of the eight banks that were taken on-board as primary dealers.
Scope of Islamic banking
His Excellency Mohamed Bin Hadi Al Hussaini noted that issuing the T-Sukuk contributes to expanding the scope of Islamic banking. It is one of the most important tools for managing monetary policy and liquidity to finance development programmes and projects. The T-Sukuks are Sharia-compliant financial certificates for trading in the secondary market along with the main distributors, reflecting the current return on investment. These Sukuk will also contribute to stimulating the securities market and strengthening the base of Islamic securities. It will provide safe and rewarding investment alternatives, and attract new segments of local and international investors.
His Excellency emphasized that the success of the first auction is another testament to the UAE’s credit-worthiness. It also reflects UAE as one of the most advanced and competitive economies in the world. It reaffirms the UAE’s position as the leading investment hub in the field of the Islamic economy. His Excellency said: “The issuance of Islamic Treasury Sukuk is a new step towards achieving comprehensive and sustainable economic and social development objectives. It contributes to the development of the financial market and investment environment in the country. It will attract financial investments and rejuvenate the local financial and banking sector to diversify funding sources. This cements the UAE’s position as a global hub for the Islamic economy.”
UAE a global financial centre
His Excellency Khaled Mohamed Balama, Governor of the Central Bank of the UAE, said: “The T-Sukuk programme’s first issuance reinforces the UAE’s competitiveness as a developed global financial centre. The programme has succeeded in diversifying financial markets activities. It has enhanced infrastructure to support Sharia-compliant investment options and alternatives. It has strengthened the resilience and stability of the financial system. This milestone will support bolstering financial investments. It will promote greater confidence among local and international investors in the UAE’s financial system. It will lead to further strategic growth across sectors and fortify UAE’s role in the global Islamic economy.”
Sound financial policies
“The remarkable success of the first auction for the issuance of T-Sukuk is a testament to the soundness of the financial and economic policies, credit-worthiness, and efficiency of UAE’s financial sector. It also supports UAE’s stimulating investment environment globally to diversify investment and financial alternatives for sustainable growth underpinned by future visions and plans. We are pleased to partner with the Ministry of Finance in enhancing UAE’s financial markets and improving the investment environment in the country.”
Important for UAE capital markets
Hamed Ali, CEO of Dubai Financial Market and Nasdaq Dubai, said: “The issuance of T-Sukuk is an important development for the UAE capital markets. It will attract diversified investment categories and provide an important investment tool for Islamic banking. The listing today further strengthens Dubai’s position as one of the largest centres for Sukuk listings globally with a $ 77.67 billion total value of Sukuk listed in Dubai. This opens the path for regional and international investors to strengthen their links with the UAE government. It will also expand its investment options in the UAE. At Nasdaq Dubai, our mission supports UAE’s ambitious strategy to develop a strong fixed-income market in the UAE by providing investors with investment opportunities in sovereign issuances and a more effective yield curve gauge in debt instruments.”