Dubai to securitise road tolls to raise $800m

The Gulf emirate has hired Citibank, Commercial Bank of Dubai, Dubai Islamic Bank and Emirates NBD as mandated lead arrangers and bookrunners for the dual currency, six-year debt instrument backed by future tolls collected through the Salik electronic toll collection system.

Dubai has hired four banks to help it raise $800 million through the securitisation of future toll revenues collected via the Gulf emirate’s electronic road toll collection system, known as Salik, the government announced in a statement.

Citibank, Commercial Bank of Dubai, Dubai Islamic Bank and Emirates NBD have been mandated as lead arrangers and bookrunners on the six-year, dual currency debt instrument. The government said the securitisation will include conventional and Islamic tranches and should be syndicated to more banks. The proceeds of the fundraising will be used to pay for infrastructure projects developed by the emirate’s Roads and Transport Authority, the government said.

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.

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.