DUBAI — Commercial Bank of Dubai, CBD, has announced the issuance of a US$600 million Additional Tier 1 (AT1) perpetual non-call 6-year bond, at a coupon of 6 percent, the lowest coupon from a Dubai bank issuer to date on a Basel III-compliant AT1 bond.

The transaction is the bank’s inaugural AT1 issuance, returning the bank to the capital markets for the first time since 2015. The issuance is the second AT1 transaction from the GCC to include a six-month par call feature.

Standard Chartered Bank and Citibank acted as structuring agents and joint global coordinators, while Standard Chartered Bank, Citibank, Barclays, Emirates NBD, First Abu Dhabi Bank and Nomura acted as the Joint Lead Managers of the bond. The bonds are listed on the Euronext Dublin and NASDAQ Dubai.

On Oct. 12, 2020, CBD announced a new mandate for a Reg S only Additional Tier 1 Perpetual Non-Call six-year bond. Investor interest covered MENA, Europe and Asia where investors referenced CBD’s strong creditworthiness, stable ownership, solid growth coupled with consistently strong financial performance.

The issue attracted a quality order book with strong participation from more than 100 investors. Despite a busy primary market backdrop, CBD benefitted from a high-quality order book that allowed CBD to set the yield at 6.00 percent, for a $600mm issue. The pricing is the lowest coupon from a Dubai bank issuer to date and compares favourably with recent issuances in the region. The deal was completed on Oct.21, and the final order book was well diversified with 61 percent of the allocation made to investors from MENA, 24 percent to Europe, 13 percent to investors from Asia.

Commenting on the transaction, Dr. Bernd van Linder, Chief Executive Officer said, "We are delighted with the outcome of this landmark AT1 transaction. The successful completion of this inaugural transaction is testimony to the bank’s strategy and execution over recent years. The issuance will enable the bank to further support local UAE businesses now and into the future. We would like to thank all parties who were involved in this issuance and in particular the investors backing the ongoing success of the bank."

Darren Clarke, Chief Financial Officer of the bank added, "The price achieved with the transaction, being the lowest coupon paid by a Dubai-based bank issuer on a Basel III-compliant AT1 bond to date, has met all our expectations. The issuance has introduced Additional Tier 1 capital to the bank further strengthened our capital profile." — WAM