The Dubai government said it had secured $3 billion in long-term financing for the expansion of its airports.
The expansion is one of three multi-billion dollar infrastructure projects that the emirate 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 funding 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, it said. 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, it said.
The deal, for which HSBC acted as financial adviser, included a $1.63 billion, 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.
Twelve international and local banks acted as joint mandated lead arrangers and joint book runners. 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.
Al Maktoum International is planned to become the main airport for Dubai as well as the home to Emirates Airline starting in 2025.
The financing 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 in September 2014 approved a $32 billion investment to expand the emirate's new airport, with the aim of handling up to 120 million passengers a year by 2022.
Citing a source close to the situation, Reuters reported in February that the facility carried a margin of 200 basis points across both the international and local tranches.