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.”

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“The board of Commercial Bank of Dubai would like to clarify that there are no discussions whatsoever concerning mergers, acquisitions or activities of a similar nature,” the Commercial Bank of Dubai’s statement to the Dubai Financial Market said.

“Board and management are fully committed to successful execution of the approved strategy, which has resulted in strong results over 2018 and the first quarter of this year,” the statement added.

The statement followed media reports that the Al-Futtaim Group which owns 10.5 percent of the bank was considering either a sale of its stake in the bank or encouraging a merger of the Commercial Bank of Dubai with another bank.

The international media have reported that up to 20 Gulf financial institutions with combined assets of $1 trillion were considering mergers and acquisitions. GCC banks have seen a wave of M&As over the past two years.

However, the global ratings agency S&P Global ratings had said recently that the cycle of M&As at the leading Gulf banks is facing a wind down. The agency cited the fact that the pool of banks with common major shareholders is shrinking as the reason for the ending of the M&A cycle.

S&P, however, added that a new wave of M&As motivated by purely economic reasons could still take place in the Gulf region. The cycle of M&As would then be longer as it would take time to convince boards and shareholders.

Abdulla Hamad Al Futtaim, the chairman of the Al Futtaim Group holding company, holds around 7 percent of Commercial Bank of Dubai shares according to data with the Dubai stock exchange.

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