Commercial Bank of Dubai raises $500m from debut green bonds

Commercial Bank of Dubai (CBD) has raised $500m with debut green bonds, following the bank’s integration of environmental, social and governance (ESG) considerations into its corporate strategy.

The five-year bond, with a coupon rate of 5.32 per cent, was priced at 140 basis points over US Treasuries and attracted more than $1.5bn in orders.

The proceeds from the green bonds will be used to finance projects eligible under CBD’s Sustainable Financing Framework that was issued in March, including green buildings, renewable energy, clean transportation access to education or pollution prevention and control.

“This successful issuance of CBD’s inaugural green bond underscores our strategic dedication to long-term sustainability and our proactive approach to addressing environmental challenges,” said Dr Bernd van Linder, CEO of Commercial Bank of Dubai.

“By supporting the UAE’s sustainability ambitions and contributing to a greener future, we are aligning ourselves with global environmental goals and driving sustainable finance to help foster a more resilient economy.”

The bonds generated significant demand from investors and the final order book delivered a price tightening of 35 basis points from the initial price thoughts, representing the strongest spread tightening this year for a MENA conventional financial institution issuance.

CBD is pleased to announce the successful launch of our inaugural USD $500 million green bond, marking a significant step in our commitment to sustainable finance.#CBDgreenbond #sustainability #sustainablefinance #sustainableinvestment pic.twitter.com/G9ysgvX8RS

— CBD (@CBDUAE) June 14, 2023

This remarkable demand showcases the confidence placed by local, regional, and international investors in the bank’s strong and sustained financial performance and ESG approach while highlighting the growing importance of sustainable investment opportunities.

CBD has integrated ESG considerations into its corporate strategy and the bank pledged to continue to support initiatives that promote environmental sustainability. The lender said it is committed to actively contributing to a more sustainable and inclusive society and economy aligned with the sustainability ambitions of the UAE.

CBD last issued public bonds in October 2020, raising $600m with Additional Tier 1 paper.

Green bond issuance in UAE

Meanwhile, the UAE has been encouraging issuers to raise green debt ahead of the COP28 climate conference starting November 30 in Dubai.

Last week, the Securities and Commodities Authority (SCA) said companies would be exempt from listing fees on the local market this year for green or sustainability-linked bonds or sukuk.

“The SCA initiative for green and sustainability-linked bonds and Sukuk is an excellent initiative that aligns perfectly with the broader COP28 agenda with regards to climate finance,” said Dr Sultan Al Jaber, COP28 President-Designate.

The registration fee for bonds and Sukuk for listing, which the board agreed to waive temporarily, is determined by the chairman of the SCA’s board of directors’ Decision No (32 / R M) of 2018 regarding the due technical service fees at a rate of 0.01 per cent of the value of the issue subject to a maximum of Dhs30,000.

Last month, First Abu Dhabi Bank raised $600m in green bonds, a unit of Abu Dhabi’s largest developer Aldar Properties issued $500m in green Sukuk and Emirati retail conglomerate Majid Al Futtaim sold $500m in green Sukuk.

Read: Registration fee waiver for firms listing green bond, sukuk in local market: SCA