April sukuk auction sees 4.7x oversubscription

The Finance Ministry’s April seven-year AED 1.1 bn Islamic Treasury Sukuk auction was 4.7x oversubscribed, with total bids hitting AED 5.2 bn, according to a press release. The Nasdaq Dubai-listed paper included three tranches: two maturing in October 2027, and a tap on its 7-year sukuk issuance maturing in February 2033.

Appetite remains high: The 2033 tranche specifically saw even tighter demand, with a coverage ratio of 5x. While the February inaugural issuance priced below US treasuries, the 2033 paper priced at a tight spread of just 10 bps over comparable US yields (yielding 4.13%). The shorter October 2027 tranche priced at 3.92%.

Our take: Government debt is increasingly stretching to longer tenors, while maintaining razor-thin spreads over the USD curve, showing signs of maturity for the AED and resilient demand.