Commercial Bank of Dubai (CBD) has announced it will exercise the call option on its $600 million Additional Tier 1 (AT1) perpetual capital securities, redeeming the notes in full on April 21, 2026, and subsequently delisting them from both Euronext Dublin and Nasdaq Dubai. The move comes as the UAE lender posts its strongest financial year on record, with net profit after tax reaching AED 3.5 billion in 2025 and total assets crossing AED 160 billion. The redemption follows a broader regional pattern of Gulf banks calling and refinancing legacy AT1 instruments at tighter spreads, capitalizing on robust investor appetite for UAE bank capital paper.
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Key Overview
- Issuer: Commercial Bank of Dubai (CBD)
- Instrument: $600 million Additional Tier 1 (AT1) perpetual capital securities
- Original issue date: October 21, 2020
- Original coupon: 6.0% (lowest by a Dubai bank issuer at the time on a Basel III-compliant AT1)
- Call/redemption date: April 21, 2026
- Redemption price: 100% of principal plus accrued interest
- Listing venues to be cancelled: Euronext Dublin and Nasdaq Dubai
- ISIN: XS2243350753
- Reason cited by bank: None disclosed
- Context: Move comes after CBD reported 22 consecutive quarters of profit growth and FY2025 net profit after tax of AED 3.5 billion
CBD Pulls the Trigger on First Call Date
Commercial Bank of Dubai, one of the United Arab Emirates’ leading mid-sized lenders, confirmed on Wednesday that it will exercise its call option on the $600 million perpetual AT1 capital securities it issued nearly six years ago. The bank said the redemption will be carried out at par on April 21, 2026, and that it intends to formally request cancellation of the notes’ listings from both Euronext Dublin and Nasdaq Dubai once the transaction settles.
The instrument being retired was a landmark deal when it was priced in October 2020. According to a statement issued by the Emirates News Agency at the time, the issuance was CBD’s inaugural AT1 transaction and represented its first return to the international capital markets since 2015. The bonds carried a 6% coupon — at the time the lowest coupon paid by a Dubai-based issuer on a Basel III-compliant AT1 — and were structured as perpetual non-call six-year notes.
Investor demand was robust from the outset. Reuters reported through Nasdaq’s wire that CBD attracted more than $1.2 billion in orders for the transaction, allowing the bank to tighten pricing significantly from initial guidance of around 6.375%. The deal was arranged by a syndicate that included Citi, Standard Chartered, Barclays, Emirates NBD, First Abu Dhabi Bank and Nomura, with Standard Chartered and Citi acting as structuring agents and joint global coordinators.
Bond market data indicates that the next scheduled call date for the security — identified by ISIN XS2243350753 — falls on April 21, 2026, exactly aligning with the redemption date announced by the bank. The securities were perpetual in nature, meaning they had no fixed maturity, but came with embedded issuer call features that allowed the bank to retire them at predetermined intervals.
What AT1 Bonds Are and Why the Call Matters
Additional Tier 1 capital securities sit at the riskier end of a bank’s capital structure and are designed to absorb losses if a lender’s capital ratios deteriorate. As asset manager TwentyFour explains, AT1s are part of a family of instruments known as contingent convertibles — or “CoCos” — which can be converted into equity or written down entirely if the issuing bank’s Common Equity Tier 1 (CET1) ratio falls below a pre-set trigger, typically 5.125% or 7%.
Because regulators require bank capital to be permanent in nature, AT1s have no final maturity. Instead, they are callable subject to regulatory approval, and the market generally expects issuers to redeem them at the first call date and replace them with a new instrument. Failing to call an AT1 — known in market parlance as “extension risk” — can severely damage an issuer’s reputation with fixed-income investors and lead to higher future borrowing costs, which is why most well-rated banks call as expected.
In CBD’s case, the decision to call sits firmly within the conventional playbook. Asset manager GAM noted in a 2024 commentary that for a chief financial officer, the decision to call or extend an AT1 bond typically begins three to nine months before the call date and depends heavily on the issuer’s ability to refinance economically. CBD has not, in its initial communication, indicated whether it will replace the redeemed notes with a new AT1 issuance, although the broader UAE market environment is currently highly receptive to such transactions.
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Strong Financial Backdrop Supports the Move
The redemption announcement comes against the backdrop of a record-breaking year for the lender. CBD reported in January that it delivered net profit after tax of AED 3.5 billion in 2025, an increase of 15.5% on the previous year, and net profit before tax of AED 3,844 million, up 15.6% year-on-year. The bank also notched a record fourth quarter, with net profit before tax of AED 1 billion in the final three months of the year.
Total assets rose 14.4% to AED 160.3 billion as of December 31, 2025, while net loans crossed the AED 100 billion threshold for the first time in the bank’s more than five-decade history. Return on equity after tax came in at a sector-leading 22.15%, an improvement of 75 basis points compared with 2024. The bank’s cost-to-income ratio held at a disciplined 26.25%, placing CBD in the top quartile of regional peers for operating efficiency.
Crucially for the AT1 redemption decision, CBD’s Capital Adequacy Ratio stood at 15.52% at year-end, comfortably above regulatory minimums and providing the buffer required to retire the instrument without compromising the bank’s regulatory capital position. Both Fitch Ratings — which assigns CBD an A- rating with a Stable outlook — and Moody’s, which maintains a Baa1 rating, have reiterated the bank’s strong credit profile in recent reviews, citing what the bank described as sound capitalisation, balanced funding mix and prudent risk management.
Earlier in the year, the lender had reported that net loans had crossed the AED 100 billion mark for the first time in the third quarter, with Gulf News noting that return on equity stood at 22.3%, among the highest in the UAE banking sector, and that the non-performing loan ratio had improved to a record low of 3.5%.
Part of a Broader Gulf Refinancing Wave
CBD is far from alone in tidying up legacy AT1 paper. Across the Gulf Cooperation Council (GCC), banks have been actively calling and refinancing perpetual capital instruments issued during the low-rate environment of 2020 and 2021, taking advantage of strong investor appetite for high-quality regional bank credit.
In late February, Qatar’s largest privately owned lender announced its own call. Commercial Bank (Qatar), in a filing reported by the Qatar News Agency, said it intended to redeem $500 million of its own perpetual AT1 capital securities on March 9, 2026, at 100% of the principal amount plus accrued interest, with the notes to be cancelled following full redemption.
The refinancing market has been similarly active on the issuance side. Mashreq, the Dubai-based lender, kicked off the UAE banking sector’s 2026 capital markets activity in mid-February with a $500 million AT1 transaction. According to Khaleej Times, Mashreq’s perpetual non-call 5.5-year deal drew an order book that peaked at $2.1 billion — more than four times the issue size — and ultimately priced at a coupon of 6.25%, tightening 62.5 basis points from initial guidance.
A separate press release distributed via Zawya indicated that Mashreq achieved its tightest ever reset margin of around 252 basis points on the deal, pricing flat to the secondary market level of its previous AT1 despite a maturity extension of more than 20 months. Notably, the release flagged that Mashreq deliberately moved early in the year to get ahead of “expected competing supply from UAE banks, lined up to issue capital securities to replace their existing ones” — a clear signal that more refinancing transactions are in the regional pipeline.
CBD’s call on April 21, 2026, places it squarely within that pipeline. While the bank has not formally announced a replacement issuance, the market is clearly conditioned to expect that issuers calling legacy AT1 paper will return with new transactions if conditions remain favorable. With CBD’s coupon on the existing notes set at 6%, and recent comparable AT1 deals from regional peers pricing at or near that level despite tighter underlying credit spreads, the economics of refinancing are far less compelling than they might appear at first glance — although the bank’s record capital position arguably gives it more flexibility to retire the notes without immediately replacing them.
Listings on Euronext Dublin and Nasdaq Dubai to Be Cancelled
Once the redemption is settled, CBD said it will request cancellation of the notes’ listings from both Euronext Dublin and Nasdaq Dubai, removing the security from public capital markets. The dual listing was a feature of the original 2020 transaction and reflected CBD’s strategy of reaching both international institutional investors via the Irish exchange and regional investors via the Dubai venue.
The cancellation will mark the formal end of CBD’s first AT1 issuance and represent a clean balance sheet event rather than a distressed action. The bank did not provide a specific reason for the redemption decision in its initial communication, but the combination of strong organic capital generation, record profitability and a comfortable capital adequacy ratio strongly suggests the move is part of routine capital structure management rather than a response to any specific stress.
Outlook for CBD and the UAE AT1 Market
For CBD, the redemption closes a chapter that began with what was at the time a landmark transaction for the bank — its first return to international debt markets in five years and its inaugural foray into Basel III-compliant AT1 capital. The instrument served its purpose, supporting the bank’s capital base through a period of significant balance sheet expansion that has seen total assets nearly double and net loans cross the AED 100 billion mark.
For the broader UAE banking sector, the call is another data point in what has been a highly active year for capital instrument refinancing. With Mashreq having already successfully tapped the market in February and other UAE lenders reportedly preparing similar transactions, the question for investors and analysts will be whether CBD chooses to follow its peers with a replacement AT1 deal in the coming months — and if so, on what terms.
What is clear is that the market’s reception to recent UAE bank AT1 issuances has been exceptionally strong, with order books frequently running multiple times oversubscribed and pricing tightening sharply from initial guidance. That backdrop, combined with CBD’s record financial performance and reaffirmed credit ratings, gives the lender significant optionality. Whether it returns to the market with a new perpetual instrument or simply pockets the capital flexibility from a stronger organic position, the April 21 redemption marks a confident moment for the bank — and a routine but meaningful event for the UAE’s evolving bank capital landscape.
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