Dubai completes $800m road tolls monetisation

The Gulf emirate has successfully syndicated a dual-currency, six-year debt instrument backed by future tolls collected through the Salik electronic toll collection system.

Dubai has successfully raised $800 million through the syndication of a debt instrument monetising future toll revenues collected via the Gulf emirate’s road toll collection system, known as Salik, Herbert Smith, an advisor to the transaction, has announced.

Salik, which in Arabic means “clear” or “open”, is Dubai’s electronic toll collection system, implemented in July 2007 to cut congestion along the city-state’s main road, Sheikh Zayed Road, which connects the city’s commerce districts. The system involves four toll collection gates and generated over $200 million in revenues last year.

Commercial Bank of Dubai, Dubai Islamic Bank, Emirates NBD and Citi acted as mandated lead arrangers on the $800 million, dual-currency, six-year sale of future receipts from Salik. The deal included both a conventional and an Islamic tranche that were syndicated on July 5, Herbert Smith said. Citi also acted as structuring advisor on the deal.

“The transaction is notable because although it is a bank-funded structure it incorporates some receivables-based technology usually found in securitisation deals, and because it contains both conventional and Islamic tranches,” explained Matthew Job, of Herbert Smith, which advised the commercial banks on the deal.

Dubai sent shockwaves through global financial markets in late 2009 when, as a result of the financial crisis, it announced it would seek a six-month debt standstill for its largest subsidiary, Dubai World. The latter finished restructuring about $25 billion of debt in March. Dubai and its subsidiary companies currently have a debt pile of over $100 billion.