Dubai Duty Free, which operates retail space at Dubai International airport, may increase the size of a planned $1.1bn loan up to around $1.5bn, according to sources close to the deal.

Bankers say the deal is already oversubscribed, with some suggesting that as lenders have made offers totalling over $2bn for the loan, with a few more banks yet to respond. Financial close on the transaction is targeted for the end of May.

“Although the transaction was launched at $1.1bn it was always the intention if possible to raise $1.5bn,” says a source close to the deal.

Syndication of the deal was launched on 5 April and responses from banks were due by the end of the month, although it seems that several banks have been given more time to respond. The deal is priced at 3.5 percentage points above the London interbank offered rate (Libor) and will have a tenor of five years.

Earlier in May, in another sign of things improving for Dubai, Jebel Ali Free Zone (Jafza) started to seek consent from bondholders to repay a $2bn sukuk (Islamic bond) early. The sukuk matures in November but Jafza is understood to already have commitments in place to refinance it. Jafza’s plans to repay the sukuk ahead of schedule is in sharp contrast to several other Dubai government entities, which have been forced to restructure billions of debt.

The Dubai Duty Free deal is being arranged by the local Emirates NBD, Dubai Islamic Bank, Abu Dhabi Islamic Bank, the UK’s HSBC and the US’ Citigroup.