CBD moves to retire $600 million AT1 bonds

Commercial Bank of Dubai will redeem $600 million of perpetual additional tier 1 securities on April 21 and seek to cancel their listings on Euronext Dublin and Nasdaq Dubai once the repayment is completed, marking the planned exit of a capital instrument the lender issued in 2020 as Gulf banks were strengthening balance sheets during a volatile funding period.

The securities were issued on October 21, 2020 with a 6% annual coupon and were structured as perpetual, subordinated and unsecured notes, with the first optional call date set for April 21, 2026. CBD’s 2025 annual disclosures and Pillar III report had already identified that date as the first point at which the bank could redeem the notes, subject to supervisory approval under the terms of the instrument.

The move is significant because additional tier 1 instruments sit at the riskier end of bank capital funding. They are designed to absorb losses in periods of stress and help lenders meet regulatory capital requirements, but they also carry features that distinguish them from conventional bonds, including discretionary coupon payments and no fixed maturity. Reuters has previously noted that market practice has generally favoured issuers calling AT1 securities at the first available date, because those instruments are typically priced by investors to that first call and a failure to redeem can unsettle future market access.

For CBD, the redemption comes from a position of financial strength rather than visible balance-sheet pressure. The bank reported net profit before tax of AED 3.844 billion for 2025, up 15.6% from a year earlier, while its capital adequacy ratio stood at 15.52%, its Tier 1 ratio at 14.39% and its common equity Tier 1 ratio at 12.54%, all above the minimum thresholds set by the Central Bank of the UAE. The same disclosures show the regulatory minimums at 10.5% for total capital, 8.5% for Tier 1 and 7% for CET1.

That cushion matters because redeeming an AT1 instrument removes a layer of regulatory capital unless it is replaced or offset by earnings retention and balance-sheet capacity. CBD has not, in the material reviewed, announced a simultaneous replacement issue tied to this call. That suggests the bank believes its internal capital generation and current buffers are strong enough to accommodate the redemption without weakening regulatory ratios in a way that would trouble investors or supervisors. This is an inference based on the bank’s disclosed capital position and the absence of a new issuance announcement in the same set of public materials.

The delisting request is largely procedural once the notes are redeemed, but it closes a chapter in CBD’s access to international and regional debt platforms. The securities had been listed on both Euronext Dublin and Nasdaq Dubai, two venues widely used by Middle East issuers seeking visibility with institutional investors. Their cancellation would remove an instrument that has been part of CBD’s regulatory capital stack for more than five years.

CBD’s decision also fits a broader story in Gulf banking, where lenders have spent the past few years balancing high profitability, steady loan demand and evolving capital needs against a changing interest-rate cycle. Large UAE banks entered 2026 with strong earnings momentum, helped by robust credit growth and still-solid margins even as markets adapted to lower rates than the peaks seen earlier in the tightening cycle. In that environment, banks with comfortable buffers have more flexibility over whether to refinance older capital instruments immediately or let retained earnings do more of the work.