Commercial Bank of Dubai's move comes as Gulf banks step up activity on international debt markets
Commercial Bank of Dubai (CBD) plans to tap international debt markets for its first dollar-denominated bond, taking advantage of attractive pricing on the back of returning investor confidence in the emirate.
Gulf Arab banks have stepped up bond sales this year, tapping into substantial investor appetite for bonds issued by regional financial institutions, with over $5bn of dollar-denominated bonds issued so far this year.
Total year-to-date issuance of dollar bonds in the Gulf is nearly $12bn.
CBD, rated A- by Fitch, has mandated Citigroup, HSBC Holdings and National Bank of Abu Dhabi to conduct investor meetings which begin on May 9, ahead of the bond sale, it said in a statement on Monday.
A possible benchmark-sized bond may follow, subject to market conditions. Benchmark-sized bond issues are typically at least $500m in size.
The programme will help the bank to capitalise on business opportunities and will enable it to benefit from an improving economic cycle in the UAE, Chief Executive Peter Baltussen said in the statement.
CBD, 20 percent owned by Investment Corp of Dubai, has an outstanding loan of $450m due in August 2014, according to Thomson Reuters data, but has so far not issued any public debt denominated in US dollars.
Banks in the region have been able to take advantage of low borrowing costs to secure funding for regional expansion, as well as bolster their capital ratios.
Last year, bond sales in the financial sector accounted for 44 percent of total bond issuance in the Gulf Cooperation Council (GCC).For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.