UAE's new 5.06% sukuk: What Dh1,000 and Dh10,000 could earn

The UAE has set the profit rate for its second retail T-Sukuk at 5.06 per cent a year over a five-year term. Subscriptions opened on September 23, and residents can invest starting from Dh1,000, Gulf News reported.

How much could Dh1,000 or Dh10,000 earn

A Dh1,000 investment in the new sukuk would generate Dh50.60 in profit a year, paid as roughly Dh25.30 every six months. A Dh10,000 investment would earn Dh506 annually, or about Dh253 every six months, based on the stated 5.06 per cent rate.

A Dh50,000 investment would bring in Dh2,530 a year, or about Dh1,265 every six months. Over the full five-year term, Dh10,000 would generate Dh2,530 in total profit, while Dh50,000 would generate Dh12,650. These figures do not include any transaction or trading charges.

Subscriptions close on September 28. The UAE Ministry of Finance is targeting Dh50 million for the new issuance.

What is a T-Sukuk

A T-Sukuk is a government-backed, Shariah-compliant investment instrument. Instead of paying interest like a conventional bond, it pays investors profit through a structure that follows Islamic finance principles.

The sukuk falls under the UAE's Sovereign Retail T-Sukuk Programme and is backed by the UAE government. The program was designed to give individual investors access to sovereign instruments once mostly available to institutions. The minimum subscription remains Dh1,000.

How does the second sukuk compare with the first

The first retail T-Sukuk, launched earlier this year, ran for two years and paid an annual profit rate of 4.30 per cent. The new issuance runs for five years and pays 5.06 per cent annually. Both pay profits every six months and share the same Dh1,000 minimum investment.

Demand for the first sukuk far exceeded supply. Investors submitted Dh445 million in orders against an original Dh50 million issue, prompting the government to double it to Dh100 million. Around 76 per cent of those subscriptions were for Dh10,000 or less.

Can investors sell before maturity

Investors are not required to hold the sukuk for the full five years. The securities are set to begin trading on Nasdaq Dubai on October 1 after allocation and settlement, creating a secondary market.

Selling early does not guarantee a full refund of the original investment. Once the sukuk trades on the market, its price can rise or fall, meaning an investor who sells before maturity could receive more or less than they originally invested. Holding until maturity avoids having to sell at the prevailing market price.

Who can subscribe to the UAE retail T-Sukuk

The offering is open to eligible UAE nationals and residents. Investors need a valid Dubai Financial Market Investor Number, or NIN, along with a registered mobile number. Those without an NIN will need to obtain one before subscribing.

Subscriptions can be made through the DFM eIPO platform, the iVestor app, the DFM app, or the digital channels of participating banks. Emirates NBD is the lead receiving bank. Emirates Islamic, Abu Dhabi Islamic Bank, Ajman Bank, Mashreq, Abu Dhabi Commercial Bank and First Abu Dhabi Bank are also participating.

What happens after subscribing

Subscriptions close on September 28, with allocation set for September 29. Settlement and refunds of excess subscription amounts are scheduled for September 30, ahead of trading starting on Nasdaq Dubai on October 1.

Applying for a certain amount does not guarantee an investor will receive that full amount. The first issuance showed how allocation can be affected by demand, with orders reaching Dh445 million even after the issue size was raised to Dh100 million.

For UAE residents, the new issuance changes two key numbers from the first offering. The investment period rises from two years to five, and the annual profit rate increases from 4.30 per cent to 5.06 per cent. The minimum entry point remains Dh1,000.