UAE Launches AED 1.1 Billion Domestic Dirhams Islamic Treasury Sukuk

The Ministry of Finance (MoF) representing the UAE, in partnership with the Central Bank of the UAE (CBUAE) as the issuing and delivering agent, has launched a benchmark auction-sized Dirham-denominated Islamic Treasury Sukuk (T-Sukuk) of AED 1.1 billion.

Mohamed bin Hadi Al Hussaini, the Minister of State for Financial Affairs, reiterated the UAE’s commitment to reinforce the Islamic economy and develop a cutting-edge acquisition system to enhance it as one of the essential pillars of the national economy.

Al Hussaini stated – “The Ministry of Finance works closely with its partners, particularly the Central Bank of the UAE, to attract investments and channel them into the Islamic economy. The T-Sukuk are financial certificates that adhere to Sharia principles, and their trading will reflect the local investment returns, support financial inclusion and economic diversification, and help achieve holistic and sustainable social and economic development objectives.”

Furthermore, he highlighted that the issuance of T-Sukuk in the local currency will aid in establishing a domestic currency bond market, expanding financing resources, strengthening the domestic financial and banking sector, and offering secure investment options for local and foreign investors.

He further added that this issuance will facilitate the development of a yield curve for UAE Dirham-denominated securities, which will enhance the domestic financial market’s stability and foster a conducive investment environment.

Khaled Mohamed Balama, the Governor of CBUAE, stressed the significance of issuing Islamic Treasury Sukuk in fostering the growth of local Sukuk markets, expanding financing resources, and fortifying the infrastructure to facilitate investment options that align with Islamic Sharia principles. This move aims to advance the Islamic financial sector, enhance the investment environment, and reinforce the UAE’s position as a premier global hub for Islamic finance.

“The issuance of Islamic Treasury Sukuk is a testament to the UAE’s dedication to fostering capital market activities and cementing its standing as a global financial center. This issuance reiterates the resilience and strength of the economic strategy and showcases the trust of local and international investors in the UAE’s capacity to bolster the financial sector by adhering to monetary procedures and strategic plans,” he added. 

“The establishment of a strong financial market strategy leads us to believe that this issuance will aid in the development of the local currency bond market and facilitate the issuance of bonds by the public sector in the UAE. It will also improve the competitiveness of the regional financial markets and promote market players to keep a single, translucent, varied, and bearable liquidity collection in Dirhams.

Moreover, it will support the enactment of the new Dirham Monetary Framework (DMF) and sustain the continued efforts to create a Dirham hazard-free costing benchmark (yield curve), which will encourage greater regional market movements and sustain the country’s economic growth,” Balama Noted. 

To create the regional bonds debt market and the mid-term yield angle, the T-Sukuk will be originally published with tenures of 2, 3, and 5 years, followed by a 10-year sukuk. This sukuk will be issued in UAE dirhams. The Ministry of Finance and the Central Bank of the UAE collaborate with appropriate government units and global financial units to secure the implementation of the finest techniques when forming the T-Sukuk. This step aims to further promote the growth of Islamic finance in the nation and reinforce its standing as an international Islamic economy epicenter.

The CBUAE’s Higher Shari’ah Authority has endorsed the structure of the Islamic Sukuk, in collaboration with the relevant authorities, to establish consistency and harmonize the operations of Islamic financial institutions, ensuring compliance with globally recognized Shariah standards and best practices. 

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