The UAE launched its first-ever seven-year Islamic bond, the longest-term bond issued under the program to date. The Dh550 million funding attracted nearly six times the number of bids, underscoring strong investor interest and confidence in the country’s Islamic finance framework.
The maximum period for issuance under the scheme
The Ministry of Finance, as the issuer and in partnership with the UAE Central Bank as the issuance and disbursement agent, announced the launch of the first tranche of seven-year UAE dirham-denominated Islamic Treasury Sukuk (commonly known as T-Sukuk).The new tranche is valued at Dh550 million and is the longest tenor issued under the Islamic Finance Ministry’s Sukuk program to date. The move reflects a strategic effort to lengthen and deepen the UAE dirham yield curve to provide a long-term benchmark for the domestic debt market.
Strong investor demand and oversubscription
The seven-year bond attracted demand of about Dh3.1 billion, almost six times the size of the issuance. This level of subscription demonstrates continued investor confidence in the resilience of the national economy and the strength of the Islamic finance sector.The issuance was part of a successful UAE dirham-denominated Islamic Treasury Sukuk auction completed in February. The total issuance of the February auction amounted to Dh1.1 billion and fell within the scope of the Islamic Finance Ministry’s Sukuk Program 2026, details of which were published on the ministry’s official website.Across the two tranches of funds offered at the auction, bids totaled Dh5.88 billion, with the overall oversubscription rate being 5.3 times. The seven-year tranche alone was about six times oversubscribed.Eight primary dealers participated, covering two tenors:
- Part will expire in May 2030
- Part will expire in February 2033
Pricing and market positioning
The auction achieved competitive, market-driven pricing.The yield to maturity is:
- The May 2030 portion is 3.53%
- The February 2033 portion is 3.779%
The February 2033 bond was issued at a discount to the face value of comparable U.S. Treasury securities, highlighting favorable pricing conditions.In addition, the Sukuk is listed on Nasdaq Dubai under the UAE Ministry of Finance’s Islamic Sukuk programme. The listing enhances investor access and supports secondary market liquidity.
Supporting the dirham yield curve and capital markets
The Sukuk program plays a central role in shaping the UAE dirham-denominated yield curve. By introducing longer tenors, the scheme provides a safe investment vehicle suitable for a wide range of investors.In addition to immediate fundraising targets, the program strengthens local debt capital markets, contributes to the broader investment landscape, and supports the UAE’s long-term economic sustainability and growth ambitions.With the launch of the first seven-year tranche and strong auction performance, the program signals the continued depth and maturity of the country’s Islamic finance ecosystem.
