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