DUBAI Oct 6 Dubai hopes to finalise $2.5
billion in fundraising this year for a 15 km (9 mile) extension
of its metro to the World Expo site and has already started
construction, a government official told Reuters.
"I hope it will be before the end of this year as we've
started construction," Mattar al-Tayer, chairman and director
general of Dubai's Roads and Transport Authority, told Reuters
in an interview this week.
He said the government had already made an advance payment
of 600 million dirhams ($165 million) to a consortium of
contractors including France's Alstom, Spain's Acciona
and Turkey's Gulermak.
Dubai's Department of Finance, which is in charge of raising
funds for the project, has been giving banks feedback on their
bids for its financing, banking sources told Reuters separately.
The sources declined to say whether banks had been mandated for
the project yet.
The project, worth some $2.9 billion, will run up about $2.5
billion in debt. Of this, about $1.5 billion is backed by export
credit agencies (ECAs) and the rest is a commercial loan, they
The agencies backing the financing are France's Coface
(COFACE) and Spain's Compañía Española de Seguros de
Crédito a la Exportación (CESCE), a source close to the
The commercial loan has a ten-year tenor, while the
ECA-backed financing has a maturity of about 18 years, banking
Last month about eight to ten international banks submitted
bids, which included pricing indications for the financing.
As the borrower is government-linked, the pricing for the
facility will be determined by Dubai's ten-year credit default
swaps (CDS), which are about 210 basis points, according to
Thomson Reuters data. The commercial part of the financing is
therefore likely to price between 200 and 230 basis points over
the London interbank offered rate (Libor), while the ECA-backed
financing is expected to offer about 150 basis points over
Libor, one banking source said.
The project will extend Dubai Metro's Red Line to the 2020
World Expo site.
The consortium of contractors was awarded a 10.6 billion
dirham contract in June this year, including procuring 50
trains, 35 of them to upgrade the metro service and 15 for the
World Expo service, according to a government statement.
($1 = 3.6724 UAE dirham)
(Editing by Ruth Pitchford)