The UAE's Islamic Treasury Sukuk (T-Sukuk) auction of 1.1 billion dirham ($299.5 million) was oversubscribed more than seven times and received bids worth AED7.83 billion for the three-year and five-year tranches, the finance ministry said on Tuesday.

The issuance was part of the government's Sharia-compliant treasury bonds programme to raise AED5 billion dirhams. It carried a spread of 4 basis points over the US Treasuries with similar maturities.

Islamic T-Sukuk are asset-backed Islamic Sharia-compliant financial instruments whose profit and payment at maturity mainly rely on the performance of the issuer’s assets.

"The Islamic T-Sukuk issuance programme will contribute to building the UAE dirham denominated yield curve, providing safe investment alternatives for investors, strengthening the local debt capital market, developing the investment environment, as well as supporting sustainable economic growth," the ministry said.

The sukuk, was issued via eight primary dealers, with the UAE Central Bank as the issuing and payment agent.

The UAE government began issuing dirham T-bonds in 2022, and T-sukuk in 2023 to diversify its funding resources.  

(Writing by Brinda Darasha; editing by Seban Scaria)