RIYADH: The UAE is launching an Islamic treasury sukuk, also known as T-sukuk, with a benchmark auction size of 1.1 billion dirhams ($299.5 million) as it eyes developing a local currency bond market. Issued by the Ministry of Finance in collaboration with the Central Bank of the UAE, the dirham-denominated T-sukuk will help the emirate diversify its financing resources and strengthen the local financial and banking industry, the Emirates News Agency, WAM, reported. The ministry said this will also help to provide safe investment options for both domestic and foreign investors. The T-sukuk will be issued initially in two-, three-, and five-year tenures, followed by a 10-year tenure later. Mohamed bin Hadi Al-Hussaini, minister of state for financial affairs, emphasized the UAE’s aim to build a pioneering investment infrastructure to boost the Islamic economy as one of the fundamental foundations of the national financial system. “The T-sukuk are Shariah-compliant financial certificates, and they will be traded to reflect the local return on investment, support economic diversification and financial inclusion, and contribute to achieving comprehensive and sustainable economic and social development goals,” Al-Hussaini said. Additionally, he pointed out that this issuance will aid in the development of the yield curve for debt in the UAE, which will strengthen the regional financial system and improve the investment environment. The ministry and CBUAE collaborate with key government organizations and international financial bodies to ensure that best practices are followed while constructing T-sukuk, the report added. The ministry said it has published a robust “Primary Dealers” code and has onboarded eight banks to participate in the T-sukuk primary market auction while actively developing the secondary market. These banks include Abu Dhabi Islamic Bank, Dubai Islamic Bank, and Abu Dhabi Commercial Bank, as well as Emirates NBD, First Abu Dhabi Bank, HSBC, Mashreq, and Standard Chartered. Khaled Mohamed Balama, governor of CBUAE, also emphasized the importance of issuing Islamic treasury sukuk in developing local sukuk markets, diversifying financing resources, and strengthening infrastructure. The move is part of the UAE’s goal to support investment options and alternatives that are compatible with Islamic Shariah provisions. It wants to develop the Islamic financial sector, improve the investment environment, and solidify the emirate’s position as a leading global hub in the area. “It will enhance the competitiveness of the local financial markets and enable market participants in the UAE to maintain a single, transparent, diversified, and sustainable liquidity pool in dirhams,” Balama said.