Dubai is finalising loans to fund the expansion of Al Maktoum International Airport and the building of its Expo 2020 exhibition centre, sources told Reuters on Monday.
The government is due to get commitments from banks over the next two weeks for a $3 billion loan to back the $35 billion airport project, while the exhibition centre is estimated to require total financing of around $7 billion, they said.
The $3 billion loan for the airport expansion is split between a $2 billion conventional tranche and a $1 billion-equivalent, local-currency Islamic tranche, the sources added.
Banks participating in the transaction, coordinated by HSBC, can commit funding across the two tranches, said one of the sources, adding that the loan will have a seven-year maturity.
Dubai’s department of finance was not immediately available for comment on the loan plan. It represents the first financing phase for the expansion of the Al Maktoum airport, which will take 12 years to complete, the sources said.
Once expanded, the new airport will be the world’s largest passenger and cargo hub, with the capacity to handle more than 220 million passengers and 12 million tonnes of cargo per year, the government said in a statement.
The Expo Dubai site, located near Al Maktoum airport, will be financed by a combination of commercial bank debt and debt guaranteed – or directly provided – by export credit agencies.
The commercial part of the financing could range between $2 and $3 billion, the sources said.
HSBC is coordinating the export credit agency-backed financing of the project.
A spokesman for Expo 2020 declined to comment.
The fundraising exercise for Expo 2020 is not expected to see major progress until February at the earliest as the government is prioritising the financing of Al Maktoum airport.
Expo Dubai will be the first World Expo hosted in the Middle East. Between October 2020 and April 2021, it is expected to host 25 million visitors, according to the Expo 2020 website.