Airport retailer Dubai Duty Free (DDF) is repricing a $1.75 billion syndicated loan for the second time in just over a year to obtain more favourable terms, a fresh sign of banks’ willingness to lend cheaply to the emirate.
The six-year loan, originally signed in July 2012, was split between dirham- and US dollar-denominated tranches, both priced at 325 basis points over the London interbank offered rate (Libor).
Last year the state-controlled retailer negotiated the pricing of the dirham-denominated tranche to 225 bps and the dollar tranche to 250 bps. On Tuesday, the DDF said it was repricing the dirham tranche further to 150 bps and the dollar tranche to 175 bps.
Another $750 million, dollar-denominated loan, taken last September to fund the company’s expansion atDubai International Airport, is also being repriced to 175 bps, the company added.
Citibank led the repricing of the $1.75 billion facility while Dubai’s Emirates NBD led work on the second loan, DDF said in a statement.
“The DDF repricing exercise is being carried out because the pricing in the loan market in the UAE is very favorable,” it said.
Over the last several months, a string of United Arab Emirates companies have cut their borrowing costs by refinancing loans with cash-flush local banks, aided by improvement in the firms’ credit profiles due to a strong economy. Confidence in Dubai has risen because of its tourism boom and a recovery in its property market.
DDF was established in 1983 as the sole duty free operator at the departure and arrival areas of all terminals at Dubai International Airport.