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T-Bonds: Local Currency Bond Issuance

With the UAE’s thriving economy and strong credit standing from major international rating agencies, the bonds issued by the federal government offer opportunities for local, regional, and global investors who are looking to diversify their investment portfolio.

Legal Disclaimer: Not for distribution, directly or indirectly, in or into the United States

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Objectives

Federal Treasury bonds (T-Bonds) are domestic bonds issued by the federal government of the UAE denominated in the Emirati Dirham (AED). The primary objective of local currency bond issuance is to develop the UAE yield curve which plays an important role in providing a benchmark and reference index for various financing operations of the federal government, including long term mortgage interest rates and capital projects. The yield curve shows the interest rates of bonds on different maturities and indicates the expected return on the invested capital over different investment terms.

Local currency bond issuance will help diversify funding sources and minimise dependency on the foreign capital markets; expand the investor base for local currency bonds which helps reduce exposure to rollover and foreign exchange fluctuation risks; provide the local investors with an opportunity to invest in local government securities in the UAE dirham; and provide alternative financing resources for the private sector, as well as banks and financial institutions in the UAE.

Relevant Resources on the UAE T-Bonds Programme

  • UAE T-Bonds Programme Information Memorandum

         
         
  • UAE T-Bonds Programme Tender Process Rules

         
         
  • UAE T-Bonds Programme Primary Dealer Code

         
         
     

T-Bonds Process

T-Bonds are fixed-income investment securities offered for subscription for investors. Purchasing T-Bonds means lending the federal government (bond issuer) an agreed amount of money for a specific period of time. In return, the investor (bondholder) receives interest payments from the government at regular intervals, known as the ‘coupon’. The bond issuer fulfils its debt obligation once the bond reaches its ‘maturity date’ or the date on which the bond’s principal amount, known as the ‘face value’ or ‘par value’, must be paid in full.

     
 

Issuance of T-bonds

The government issues T-Bonds. The investor subscribes to the issuance and purchases the bond’s issue price.

     
 

Interest payment to investors

The government makes fixed, periodic interest payments to the investor.

     
 

Repayment of face value

When the bond reaches maturity, the government repays the face value, including outstanding interests.

     

Benefits of building a yield curve in dirham for the UAE economy

 

Ability to cover future funding needs in own currency

 

An actively traded government bond market contributes to efficient pricing and capital allocation

 

An active government securities market develops capital market and provides safe investment assets

 

Provides opportunities for foreign investors to invest in local currency

     

Frequently Asked Questions

To provide further information about the UAE government bonds, we have gathered the most frequently asked questions for your reference.

The T-Bonds are sold at auctions, planned to be held once every six weeks . For specific dates, see our Tentative Auction Issuance Calendar published on our website, which shows auction dates in advance.