The UAE Ministry of Finance (MoF), in collaboration with the Central Bank of the UAE (CBUAE), has successfully completed a new auction of Islamic Treasury Sukuk (T-Sukuk), raising AED 1.1 billion as part of its 2025 issuance program. Here’s what this means and why it matters.
What Are T-Sukuk?
T-Sukuk are Shariah-compliant financial instruments—similar to traditional government bonds, but structured to comply with Islamic finance principles, which prohibit interest. These sukuk are denominated in UAE dirhams and serve as low-risk investment options for a variety of market participants.
What Happened in the Latest Auction?
Held in May 2025, the auction included:
- A re-opening of the May 2027 tranche, and
- A newly issued 5-year tranche maturing in May 2030.
The issuance drew strong demand from eight primary dealers, with total bids reaching AED 6.93 billion, resulting in an oversubscription rate of 6.3 times. This highlights significant investor confidence in the UAE’s economic stability and Islamic finance framework.
What Were the Results?
- Yield to Maturity (YTM):
- 3.99% for the 2027 tranche
- 4.06% for the 2030 tranche
- These rates were extremely competitive, with spreads of just 2 basis points and 0 basis points, respectively, above similar U.S. Treasuries at the time of issuance.
Why Does This Matter?
This successful auction reflects:
- Strong market trust in the UAE’s credit profile
- Increased investor appetite for Shariah-compliant investments
- Strengthening of the local debt capital market
It also helps establish a dirham-denominated yield curve, which supports pricing for corporate issuances, enhances transparency, and offers more diverse funding tools. Ultimately, this contributes to the UAE’s long-term goals of sustainable economic growth and financial market development.
