The Finance Ministry is opening up its treasury sukuk to retail investors through a new initiative, allowing citizens and residents to invest directly in shariah-compliant government-backed treasury sukuk (T-Sukuk) through national banks, according to a ministry statement. The initiative aims to boost financial inclusion and widen the investor base for government financial instruments.

How it works: The move will enable individuals to invest in AED-denominated T-sukuk — which were previously limited to institutional investors — through fractionalized digital investment platforms run by national banks, with the minimum investment starting from AED 4k. The first bank joining the initiative will be made public on 3 November, the statement said.

REMEMBER- The UAE holds monthly T-sukuk auctions as part of a wider program, which is consistently oversubscribed. The latest T-sukuk issuance in September raised AED 1.1 bn, and was 4.6x oversubscribed, attracting AED 5.1 bn in bids.

The initiative will also help stimulate portfolio diversification and long-term savings for retail investors in the UAE, opening them up to high quality, government-backed and highly secured shariah-compliant notes.

The digitization aspect will also help boost transparency and reduce technical barriers, global head of Islamic finance at Fitch Ratings, Bashar Al Natoor, told EnterpriseAM.

A lot rides on effective outreach and proper onboarding: “Effective retail outreach will depend on investor education, seamless onboarding, and strong standards of transparency and disclosure to build trust among new participants,” he said, adding that regulatory transparency and financial literacy will also be important to sustain demand. “Further detail is awaited on distribution channels, ongoing investor protections, secondary trading mechanisms, and performance metrics as the program matures,” he added.

“Going forward, consistent monitoring of retail uptake, secondary market development, and cross-border opportunities will be essential to assess the initiative’s effectiveness,” he added.

Access for global investors next? Similar initiatives usually test waters locally first, scoping out demand before rolling it out to a wider, international base of retail investors, account director for EMEA and MENA analyst at TS Lombard Hamzeh Al Gaaod told EnterpriseAM. Following this play would boost capital inflows and liquidity for the Emirates as it looks to develop its capital markets to rival those of peers like China and India, he added.

The UAE’s debt market is approaching USD 400 bn, amid elevated momentum in both conventional and Islamic segments, according to Al Natoor. Infrastructure investment, ESG mandates, and increasing investor expectations, are the key factors supporting this growth, with the UAE ranking as the second-largest debt capital market in the GCC, he explained.

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