UAE debuts dirham-denominated sukuk - state news agency

DUBAI, April 26 (Reuters) - The United Arab Emirates is selling 1.1 billion dirhams ($299.6 million) of Islamic bonds denominated for the first time in the local currency, state news agency WAM said, a move aimed at deepening the country's Islamic finance markets. The treasury sukuk, or T-sukuk, will be issued with tranches maturing in two, three and five years, followed by a 10-year bond at a later date, WAM said. The UAE has already sold regular treasury bonds denominated in its local currency, raising 1.5 billion dirhams in May last year, following similar sales by other Gulf countries. Bashar Al Natoor, global head of Islamic finance at Fitch Ratings, said issuing dirham-denominated T-sukuk was "an important step" to enabling the development of the nascent domestic debt market. "The T-Sukuk would give Islamic banks and conventional banks an option to invest their liquidity, and it could also help open the way for corporates and financial institutions to issue dirham-denominated bonds and sukuk," he said. He added that local currency sukuk could provide smaller issuers that are unable to access international debt markets with an alternative way to raise funds. Noting that a corporate funding culture geared primarily towards bank financing was a key hindrance to domestic debt market growth, he added that further development was needed regarding regulation, market infrastructure, depth of liquidity and secondary market activity.

($1 = 3.6719 UAE dirham) (Reporting by Yousef Saba; Editing by Kirsten Donovan)