Banks are seeking higher pricing on a $3bn loan that Dubai is raising to help fund airport expansion as it prepares for World Expo 2020, people with knowledge of the plan said.
Lenders are seeking a margin of 200 to 220 basis points over the benchmark rate for the seven-year facility, compared with Dubai and adviser HSBC Holdings’ proposal of 180 basis points plus about 14 basis points in fees, said the people, asking not to be identified because the information is private.
The loan, which includes a $2bn conventional tranche and a 3.67bn dirham ($1bn) Islamic facility, is being raised by a special-purpose company that will help pay for the expansion of Dubai World Central – home to the city’s new Al Maktoum International Airport – and associated facilities in the south of the city, said the people. The special purpose company will be paid by Dubai’s department of finance based on a formula linked to passenger numbers at the city’s two airports, said the people.
Dubai International Airport is already the world’s busiest by international passengers as the city developed into a hub for trans-continental traffic between America and Europe with Asia. The emirate is developing Al Maktoum close to the Expo 2020 site with an annual capacity of about 220mn passengers and plans to move flagship carrier Emirates by 2025. Spokesmen for Dubai’s department of finance and HSBC declined to comment.
Dubai International and Al Maktoum will grow to serve 146mn passengers by 2025, up from 78mn in 2015, the government said last month.

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