The Ministry of Finance is studying the issuance of bonds denominated in UAE dirhams

The Ministry of Finance is studying the issuance of bonds denominated in UAE dirhams
The Ministry of Finance is studying the issuance of bonds denominated in UAE dirhams

Younis Haji Al-Khoury, Undersecretary of the Ministry of Finance, said that the ministry is studying the issuance of bonds denominated in UAE dirhams.

Al-Khoury added, during a remote media briefing today: “We are currently working with consultants from the World Bank and also consultants from private companies to study the appropriate time to issue bonds denominated in Emirati dirhams.”

Al-Khoury added: “We hope to see bonds denominated in dirhams in the near future, so that the Emirati investor can diversify his investment portfolio.”

During the briefing, Al-Khoury announced the results of the subscription of the state’s sovereign bonds, which included traditional medium and long-term tranches of 10 and 20 years, in addition to the 40-year dual-listed Formosa bond segment, pointing to the great success in closing the offering of this package of multi-tranche sovereign bonds. Denominated in US dollars, the total value reached 4 billion US dollars.

The Undersecretary of the Ministry of Finance said that the success in pricing these bonds, and the great demand from international and regional investors, confirm the merit, high credit standing and confidence that the country enjoys in global markets, and its ability to overcome all crises, foremost of which is the effects of the “Covid-19” pandemic, which It is confirmed by International Monetary Fund estimates and expectations for the UAE economy to grow by 3.1% in 2021, as the UAE Central Bank expects a growth of 4.2% in 2022.

Al-Khoury pointed out that the aim of the issuance is to achieve the state’s strategy to build the yield curve and start in the future for issuances denominated in UAE dirhams. Note that part of the bonds will be used to finance infrastructure projects according to the needs of the federal government, and not to exceed 15% of the direct and indirect public debt.

Younis Al-Khoury confirmed that the record of requests to offer these sovereign bonds for the UAE exceeded the barrier of $16.5 billion, excluding JLM interest, before it peaked at more than $22.5 billion, excluding JLM interest, achieving an increase over the target subscription rate by 5.6%, as the large order book for bonds increased the deal size from $3 billion to $4 billion.

The credit rating of the UAE contributed to giving these bonds a high competitive advantage, as we were rated AA – by the international “Fitch” agency, and “Aa2” in creditworthiness, which is the strongest sovereign rating in the region, by the international rating agency “Moody’s”. With the country receiving a stable outlook from both agencies.

Al-Khoury stated that these results reaffirm the correctness of government policies and the pioneering comprehensive economic and social development process of the UAE, which worked on setting a solid general budget for the union, achieving low levels of government debt, building national capacities and competencies, and excelling in the efficient management of economic projects, which Contributed to providing solvency and high financial reserves, and enhanced economic stability.

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