Islamic Treasury Bonds Auction for January attracts bids worth AED 6.91 billion
UAE's Successful AED 1.1 Billion Islamic Treasury Sukuk Auction
The UAE's Ministry of Finance, in partnership with the Central Bank of the UAE, has announced the results of a successful auction of Islamic Treasury Sukuk, valued at AED 1.1 billion. This auction is part of the Islamic T-Sukuk issuance program for the first quarter of 2025.
Strong Demand and Oversubscription
The auction attracted significant interest from eight primary dealers, with bids reaching AED 6.91 billion, resulting in an oversubscription rate of 6.3 times. The tranches offered are set to mature in May 2027 and September 2029.
Yield to Maturity
The tranche maturing in May 2027 has a Yield to Maturity (YTM) of 4.32%, while the tranche maturing in September 2029 offers a YTM of 4.43%. These yields represent a spread of 7 and 10 basis points above US Treasuries with similar maturities at the time of the auction.
Economic Impact
The Islamic T-Sukuk issuance program is designed to build the UAE Dirham-denominated yield curve, provide safe investment alternatives, strengthen the local debt capital market, and support sustainable economic growth.
Doubts Revealed
UAE
UAE stands for the United Arab Emirates, which is a country in the Middle East made up of seven smaller regions called emirates.
AED
AED is the currency of the United Arab Emirates, known as the United Arab Emirates Dirham. It's like how India uses the Rupee.
Islamic Treasury Sukuk
Islamic Treasury Sukuk are financial certificates similar to bonds but they follow Islamic laws, which means they don't involve interest. Instead, they share profits or rents.
Auction
An auction is a way to sell things where people bid money and the highest bidder wins. In this case, the UAE sold Sukuk to the highest bidders.
Oversubscribed
Oversubscribed means that more people wanted to buy the Sukuk than were available. It shows high interest and demand.
Tranches
Tranches are parts of something that are divided up. Here, it means different parts of the Sukuk that mature at different times.
Yields
Yields are the earnings or returns from an investment. It's like the profit you get from putting your money in a bank.
Central Bank of the UAE
The Central Bank of the UAE is like the Reserve Bank of India. It manages the country's money and financial policies.
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