Commercial Bank of Dubai raised $500 million through a debut green bonds issuance with orders peaking at $1.5 billion.

The five-year bond, with a coupon rate of 5.319%, was priced at 140 basis points over US Treasuries, a 35 basis points (bps) tightening from initial guidance of 175 bps, the bank said on Wednesday.

The proceeds from the green bond issuance will be allocated to financing eligible initiatives, including renewable energy, green buildings, clean transportation and pollution prevention and control.

Commercial Bank of Dubai, listed on the Dubai Financial Market, is 20% owned by Investment Corporation of Dubai, the principal investment arm of the Dubai government.

The UAE has been encouraging issuers to raise green debt in the run up to COP28 climate conference 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. Mall operator Majid Al Futtaim issued a green sukuk worth $500 million.

(Writing by Brinda Darasha; editing by Seban Scaria)