Dubai Duty Free aims to lower the interest on a US$1.75 billion loan by as much as 31 per cent after Dubai's default risk plunged since the financing was signed last July, a banker familiar with the deal said.
Dubai Duty Free, the world's biggest airport retailer, raised the six-year syndicated loan from a group of 26 banks and has asked them to reduce interest on the dollar portion by 75 basis points, or 0.75 percentage point, over the benchmark rate, said the banker, asking not to be identified because the information is private. It has asked the margin on the dirham tranche be cut by 100 basis points, he said. Both portions paid a margin of 325 basis points.
A spokeswoman for Dubai Duty Free did not comment when called by Bloomberg News.
Dubai's five-year credit default swaps, which measure the risk that a government loan won't be repaid, plunged 34 per cent over the past year as three state-controlled companies successfully repaid or rolled over about $3.75bn of debt. The contracts fell to 236 on July 1, according to data provider CMA, which is owned by McGraw-Hill and compiles prices quoted by dealers in the privately negotiated market.
Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Citigroup, Dubai Islamic Bank, Emirates NBD and HSBC Holdings helped Dubai Duty Free obtain the loan. Spokesmen for Citigroup, Emirates NBD and HSBC Holdings declined to comment, while spokesmen for Abu Dhabi Commercial Bank and Dubai Islamic Bank could not immediately be reached.
Dubai Duty Free, which opened in 1983, operates 18,000 square metres of retail space at Dubai International Airport. Its revenue rose 10 per cent in 2012 to $1.6bn.
* Bloomberg News
