Airports: $1bn for Dubai’s second airport?

Dubai Airports is seeking to raise loans of at least $1bn to fund the purchase of equipment as it expands its second airport, people with knowledge of the matter told Bloomberg.

The government-owned airport operator is talking to banks about the export-credit agency-backed fundraising, which is likely to have a maturity of more than 10 years, said the people, asking not to be identified because the information is private. A decision on which agencies will be involved with the financing will be made once the contracts are awarded later this year.

Dubai Airports referred Bloomberg to the Department of Finance, which oversees its fundraisings, when approached for comment. A spokesman for the DoF declined to comment.

The money will help pay for a baggage-handling system and an automated people mover to carry passengers within the new Al Maktoum International Airport, one of the people with knowledge of the deal said.

The emirate aims to spend $35.7bn to develop Al Maktoum, its second airport and logistics hub, and is likely to rely on debt for much of the financing, people with knowledge of its plans said in December. The new fundraising follows the $3bn loan that Dubai Airports raised in May to fund the expansion of this facility as well as of Dubai International Airport.

Export-credit agencies are quasi-government or private institutions that act as intermediaries between states and exporters to facilitate loans. The financing can take the form of credits or credit guarantees, or both.

Dubai International Airport, the city’s main facility, is the world’s busiest by international passengers as the emirate develops into a hub for trans-continental traffic between Asia, the Americas and Europe. Traffic grew at an average compound annual rate of 12.6% from 2000 to 2016 as Dubai’s Emirates carrier expanded into the world’s largest by international passengers.

Dubai International and Al Maktoum will grow to serve 146mn passengers by 2025, up from 83.6mn in 2016, the government said in November. While Dubai International is approaching maximum capacity, the master plan for Al Maktoum’s second phase has been approved and the detailed design work is underway, the government said.

Emirates plans to move to Al Maktoum but its relocation has been delayed to between 2026 and 2030, from 2025, airline President Tim Clark said at the Paris Airshow in June.

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