UAE’s dirham bonds to set up foundation for a robust debt capital market

UAE’s dirham bonds to set up foundation for a robust debt capital market

Dubai: The launch of local currency bonds by the UAE will be a gamechanger in the country’s debt capital market development, setting up a national benchmark and a yield curve. The UAE Central Bank is scheduled to conduct the first tranche of dirham-denominated treasury bonds auction worth Dh1.5 billion on May 9. Auctions will repeat in June, August, September, October and December. The ministry and the Central Bank of the UAE will sell bonds with two-, three- and five-year tenures. They are targeting a sale worth Dh1.5 billion ($400 million) at each auction. The UAE’s entry into a public debt programme was marked by the issuance of Federal Debt Law in 2018. The debut Federal bond issuance was in October 2021, with the transaction denominated in US dollar. (Several of the emirates had run dollar bond programmes in the past.) The size of the UAE’s DCM is around $245 billion. Outstanding dirham denominated bonds and sukuk stands just about $31.6 billion or 12.8 per cent of the total, with issuance mainly from the central bank and other government agencies. The volume of outstanding dirham sukuk reached $1.5 billion at the close of Q1-2022. Analysts say the most important aspect of