The efforts by UAE Ministry of Finance have been wholly successful in raising 25 billion dirhams, which amount to around $6.8 billion, through government bonds and the dirham-denominated Islamic Treasury Sukuk Programs launched in 2022. These programs have elicited robust investor confidence up to the end of August this year, further popularizing UAE as a competitive global investment hub.
Total issuance in the government treasury bonds stands at 11.2 billion dirhams, while Islamic Sukuk issuance stands at 13.8 billion dirhams. In May, the ministry paid 4.85 billion dirhams in two-year treasury bonds, bringing outstanding bonds to 6.35 billion dirhams.
The country stayed in the second position during the first half of 2024 to increase its total from $15.4 billion through 58 issuances in the same period last year to $20.6 billion through 65 issuances. The overall value of GCC bonds and sukuk was met at 27 percent. Saudi Arabia dominated the market through $37 billion through 44 issuances.
Treasury bonds and the Sukuk Programs are now at 20.15 billion dirhams in outstanding public debt. In consultation with the Central Bank of the UAE, the central issuing and paying authority, these programs were designed. A settlement process aided by a local platform, consistent with international standards, will thus achieve efficiency as well as transparency.
Similarly, the treasury bond efforts of the ministry have attracted many of the key players in financial institutions like Emirates NBD, Abu Dhabi Commercial Bank, and First Abu Dhabi Bank, to name a few, who are the same primary distributors. Notably, demand for every auction has remained notably strong by often exceeding the available subscription sizes, and it is at that point that this emphasizes the high market appetite that exists for the debt instruments of the UAE.
These programs have been so successful that the UAE has managed to retain high sovereign credit ratings such as AA from Fitch Ratings and Aa2 from Moody’s, both of which carry a stable outlook. Such financial credibility, along with such sound economic policies, enhances the attractiveness of UAE as an investment destination.
In fact, they hold the key place in the development of a local currency market and formation of a medium-term yield curve. In the next step, it is planned to introduce two- to five-year bonds. The main factors here are the diversification of funding sources, the revitalization of the financial sector on its territory, and the proposition to international as well as local investors of safe investment opportunities.
Such efforts place the UAE in an excellent position to service any future funding and improve on regional financial market power. The Ministry of Finance seeks to ensure that the nation’s economy is more resilient, promoting long-term sustainable growth.
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