The United Arab Emirates (UAE) has announced the dates for the sale of treasury bills issued in Emirati dirhams.
the Ministry of Finance said the first auction will take place on May 9. The auctions will then repeat in June, August, September, October and December. The ministry and the Central Bank of the United Arab Emirates will sell bonds with terms of two, three and five years. They are targeting a sale worth 1.5 billion dirhams ($400 million) at each auction. The first auction will feature two- and three-year land bonds, according to ministry data.
What is that? Treasury bills, also known as treasury bills, are debt securities that represent the obligation of the issuer – in this case, the government treasury – to repay the purchaser. States sell bonds to fund their spending. Bond buyers are then repaid the debt amount over time with interest.
Why is this important: The United Arab Emirates announced its intention to sell bonds in dirhams last week. Finance Minister Mohamed Al Hussaini said they hope to build a local bond market, diversify their financial resources and boost the local banking sector by selling dirham bonds.
The UAE government never issued bonds until late last year when it began marketing US dollar bonds.
Selling local currency bonds has several advantages. It promotes local investment, since generally the only entities that deal in local currency are based in said country. Using local currency for bonds instead of the dollar also mitigates the currency risk for debt repayment, which in this case would be the weakening of the dirham against the dollar.
Know more: The UAE is undergoing several financial changes. In January, the United Arab Emirates announced that it would begin taxing corporate profits for the first time ever from 2023. Earlier this month, the Emirates Federal Revenue Authority launched a whistleblower program aimed at to prevent tax evasion. The Gulf state is also attracting several cryptocurrency platforms.
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