Etihad Rail has asked banks to finance a AED4.7bn ($1.28bn) loan to fund the construction of the first phase of the UAE rail network.

Banks are due to respond to the request by 16 August, according to bankers close to the deal. Both international and local banks have been approached to lend to Etihad Rail and the borrower has a preference for dollars.

Etihad Rail has issued the request, but bankers say the deal is backed by Abu Dhabi National Oil Company (Adnoc), which is using the first phase of the rail scheme to transport sulphur between Habshan and Ruwais. “The deal is effectively Adnoc risk and its short tenor, so it should attract good interest,” says one banker in the UAE, who has been invited to lend to the deal.

The tenor of the deal will be around five years, according bankers who have seen the documentation sent out by Etihad Rail a few weeks ago. Only a short time has been given for banks to respond as Etihad Rail already carried out two market soundings on the loan structure.

Another source says that although the deal is coming out in the name of Etihad Rail, banks are being asked to price the deal based on lending to Adnoc.