The Central Bank of the UAE's (CBUAE) AED 1.1 bn T-Sukuk auction in October was 4.2x oversubscribed, receiving AED 4.6 bn in bids, with participation from eight primary investors, according to the state news agency Wam.

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The details: The auction included two tranches, with the first tranche set to mature in October 2027, offering a yield of 3.49%, while the second tranche will mature in 2030 with a yield of 3.65%. The yields represent a spread of 7 basis points above comparable US Treasuries.

October’s auction builds on successive oversubscribed auctions over the past months, including one in September seeing 4.6x in demand and one in July which saw 5x in demand and received AED 4.5 bn in bids. June’s auction drew AED 6.2 bn in bids and was 5.6x oversubscribed, May’s auction was 6.3x oversubscribed, and April’s AED 6.12 bn gave it a subscription rate of 5.6x.

REMEMBER- The Finance Ministry is opening up its T-sukuk to retail investors, allowing individuals to invest directly in shariah-compliant government-backed treasury sukuk through national banks. The initiative aims to boost financial inclusion and widen its investor base for government-backed financial instruments.

A few key new details around the initiative have been made public: While we’re still waiting for the partnering banks to be announced, the Finance Ministry published FAQ s to offer more details on what to expect. Retail investors will pay a preferential transaction fee of 0.25% for buying and selling T-sukuk, while a yearly running fee amounting up to 0.30% will be applied on the total investment portfolio on a monthly or a quarterly basis, or as applicable. Investors will also receive their returns on a semi-annual basis.

No taxes will apply on individuals investing in T-sukuk, given the absence of income tax, according to the ministry.

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