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UAE collaborates with Bloomberg, Euroclear Bank to offer solution for Islamic bonds

UAE collaborates with Bloomberg, Euroclear Bank to offer solution for Islamic bonds
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UAE – Mubasher: The UAE Ministry of Finance teamed up with Bloomberg and Euroclear Bank to launch a new auction solution which will enable the ministry, in collaboration with the Central Bank of the UAE (CBUAE), to issue dirham-denominated Islamic Treasury Sukuk (T-Sukuk).

The Sharia-compliant financial certificates will be auctioned through the primary and secondary market solutions of Bloomberg, while they will be settled through a local platform, compliant with international standards, built and operated by Euroclear Bank.

The ministry and the central bank will utilise Bloomberg AIM, a leading investment and order management solution, to streamline processes for market operations, such as custom swift messages to Euroclear Bank for settlement, according to a press release.

Meanwhile, the issuance will be executed on the Bloomberg Auction System to connect to the primary dealers that are selected by the UAE ministry. Furthermore, trading of the T-Sukuk notes will also be facilitated over the Bloomberg E-Bond system, which will allow broader access to the secondary market for eligible investors.

Minister of State for Financial Affairs, Mohamed bin Hadi Al Hussaini, said: “The Ministry of Finance cooperates with all its partners, foremostly the Central Bank of the UAE, to attract investments and deploy them in Islamic economy channels.”

Al Hussaini elaborated: “The T-Sukuk are Sharia-compliant financial certificates, and they will be traded to reflect the local return on investment, support economic diversification and financial inclusion, as well as contribute to achieving comprehensive and sustainable economic and social development goals.”

He also noted that issuing T-Sukuk will help build the UAE Dirham-denominated yield curve, while will endorse the local financial markets and develop the investment environment.

Head of Financial Solutions, Middle East, and Africa at Bloomberg, Giuseppe Netti, said: “This new Bloomberg offering enables the issuance of Islamic Bonds for central banks across the region and beyond, while providing regulators with greater transparency in the market.”

The announcement of the new solution follows on the CBUAE’s launch of a securities issuance programme for Monetary Bills with Bloomberg and Euroclear in 2020, and the subsequent expansion of the programme to Treasury Bonds in 2022 in collaboration with the finance ministry.

Deputy Head of Capital Markets at Euroclear, Yifat Sauer, said: “The successful launch of the UAE Ministry of Finance Sukuk on our jointly developed innovative platform is another watershed moment for the UAE capital markets. The diversification of debt through issuing Islamic Treasury Sukuks will reinforce the economy and contribute to a more holistic financial marketplace.”