The Dubai government has secured $3bn in long-term financing for the expansion of its airports, Reuters reported.
According to the report, the expansion is one of three multi-billion dollar infrastructure projects that Dubai is planning to fund through debt, together with the building of Dubai's World Expo 2020 exhibition site and an extension of Dubai's Metro system.
The fund will be used for the expansion and development of Dubai International Airport and Al Maktoum International Airport, the emirate's new airport being developed on the edge of Dubai.
‘The facility signifies the first stage of a larger funding plan which will transform Al Maktoum International into the primary airport for Dubai, serving up to 146 million passengers by 2025,’ the report said.
HSBC acted as the financial adviser for the deal, which included a $1.63bn, seven-year conventional loan and a $1.48 billion-equivalent, seven-year ijara facility denominated in dirhams. Ijara is a common lease-based structure used in Islamic finance.
As many as twelve international and local banks acted as joint mandated lead arrangers and joint bookrunners. They included Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Bank of China, Citibank, Dubai Islamic Bank, First Abu Dhabi Bank, HSBC, Industrial and Commercial Bank of China, Intesa Sanpaolo, JPMorgan, Noor Bank and Standard Chartered.
The report said that Al Maktoum International airport has been planned to become the main airport for Dubai as well as the home to Emirates Airline starting in 2025.
The fund was raised by a consortium of Dubai state entities, comprising the Department of Finance, state-owned fund Investment Corporation of Dubai, and the Dubai Aviation City Corporation.
Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum had in September 2014 approved a $32bn investment to expand the emirate's new airport, with the aim of handling up to 120mn passengers a year by 2022.
Reuters had reported in February that the facility carried a margin of 200 basis points across both the international and local tranches.