Dubai Duty Free, which operates retail space at Dubai International Airport, is set to launch the syndication of a $1.1bn loan backed by cashflows on 4 April to fund expansion.

Bankers close to the deal say that lenders will be given around three weeks to respond with commitments to the loan, which is priced at 3.5 percentage points above the London interbank offered rate (Libor) and will have a tenor of five years.

Investment Corporation of Dubai, the government’s largest investment vehicle, has appointed the local Emirates NBD, Dubai Islamic Bank and the UK’s HSBC and the US’ Citigroup to arrange the deal.

One banker close to the loan says that financial close is targeted for mid-May. “This deal is expected to get a strong response as bankers like the fact that it is backed by cashflows,” says the banker. Another banker involved in the deal says, “We have already had some indications from banks that this deal will get a strong response.”

The Dubai government started seeking bank interest in the transaction in late 2011, and appointed lenders to run the deal in March 2012. Last year Dubai did a similar transaction, using cashflows from its Salik road toll system to raise $800m from banks, in a deal that attracted so much interest from lenders that the government was able to reduce the interest rate it was offering to pay banks.

Sales at the retail outlets operated by Dubai Duty Free at the three terminals at Dubai airport rose by 14 per cent in the first quarter of 2012 compared to the same period in 2011. Total sales hit $390m during the period, and the company’s vice chairman Colm McLoughlin says it should hit its target of sales of $1.64bn for the year.