The Commercial Bank of Dubai raised USD 500 million through an initial green bond issuance, with orders peaking at USD 1.5 billion.
The five-year bond, which has a coupon of 5.319%, was rated 140 basis points (bps) higher than US Treasuries, a 35 basis point tightening from the original forecast of 175 basis points, the bank said.
The proceeds from green bond issuance will be used to fund eligible initiatives including renewable energy, green buildings, clean transportation and pollution prevention and control.
Commercial Bank of Dubai, listed on the Dubai Financial Market, owns a 20% stake in the Investment Corporation of Dubai, the main investment arm of the Government of Dubai.
The UAE has encouraged issuers to issue green debt ahead of the COP28 climate change conference which is to be held in Dubai in November 2023.
Earlier this month, the Securities and Commodities Authority (SCA) approved a proposal to exempt companies from paying registration fees to list green or sustainability-linked bonds or sukuk on the local market this year.
In May, First Abu Dhabi Bank raised $600 million in green bonds, while Aldar Investment Properties, a subsidiary of Abu Dhabi’s largest developer Aldar, raised $500 million in green Sukuk, and private Emirati retail conglomerate Majid Al Futtaim has issued a $500 million green sukuk.
According to Allied Market Research, the global sustainable finance market, which was valued at USD 3.65 trillion in 2021, is projected to hit USD 22.48 trillion by 2031, growing at a compound annual rate of more than 20% between 2022 and 2031.
Data from Bloomberg’s Capital Markets League Tables showed last month that the green bond and sukuk issuances from the GCC hit a record in 2022 at USD 8.5 billion from 15 deals, compared with USD 605 million from six deals in 2021.
Nael Amin, senior manager in the financial services practice at Arthur D Little, said, “Many financial institutions in the Middle East have designed comprehensive ESG strategies that open the door to new pathways to top-line growth, business opportunities, cost reductions, regulatory compliance and employee satisfaction. This growing trend demonstrates the momentum that ESG is gathering in financial institutions, as the world’s banks increasingly emphasise ESG and infuse it into their business models.”