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The Commercial Bank of Dubai (CBD) will follow an investor meeting with the launch of a five-year dollar-denominated bond, reports Argaam. The exercise is one in a series of plans by CBD to seek access into international financial markets and reach investors worldwide. An investor meeting set by the bank for Tuesday should also clarify some details regarding the issuance of the bond, particularly on terms and structure.
These are benchmark-sized bonds, which typically signify at least a value of $500 million. Evidently, CBD would raise something close to this amount, if not more. In international bond markets, the terms benchmark-size often mean significant issuance. It will help facilitate the ability of the issuer to take a comfortable position in the market while still fulfilling demand and investor needs.
By choosing to float such a huge bond, CBD is arguably setting itself up for the amount of money it hopes to collect; that is, it expresses the intention of accessing the global market of fund mobilisation. $500m is seen as the cut-off point for issues in the bond market, hence the bank’s expectation of high-scale investments in this direction. The strategy also fits CBD’s need to harmonise its financial operations worldwide, embracing investors from all directions.
Appointed bookrunners for the issue process and to manage the entire process of fund raising through this bond, several major financial institutes have been roped in-Citibank, Commerzbank, Emirates NBD Capital, First Abu Dhabi Bank, JPMorgan Chase, and Standard Chartered. Engagement of these world-renowned institutions further adds to the credibility of the issue and reflects commitment to CBD’s robust financial soundness and market repute.
This move by CBD to issue these bonds is in keeping with the general objective of the bank, which is to mobilise resources that will fire its expansion plan while at the same time improving its liquidity position. In entering the dollar-denominated bond market, CBD aims to attract a wide range of investors, especially from the international arena. The foreign currencies, such as the US dollar, which carries a global reputation of being safe and secure in the financial markets, give this bond an attractiveness to investors.
As the investor meeting approaches, market participants eagerly look forward to further information regarding the pricing structure and terms of the bond. Such information may probably play an essential role in the interest and participation of investors. The bank will issue bonds in the international financial markets for the first time; it follows that the issuer commits to making an expansion in international financial markets influence and consolidate a high-ranking status in the world of banking.
As CBD is set to take the step forward, the bank will come to grow its financial base while also expanding its investor base in trying to reach global stakeholders. This strategy seems very appropriate considering the long term vision of CBD pertaining to an increase in its international presence that ascertains its ability to tap foreign capital markets and prove growth stability in competition.
