Etihad Rail has been asking banks to express interest in funding a loan of up to $1.3bn to fund the construction of the first phase of the rail network.

The company has asked banks to give indications of what levels of commitment they could provide across loans of several different tenors ranging between five and 20 years, and what sort of pricing they would charge on those loans.

One banker based in Dubai says it is the second time that Etihad Rail has done a market sounding exercise for funding the first phase of the UAE rail project. The market sounding has been led by Etihad Rail itself.

Sources at both UAE-based and international banks confirm they have been approached by Etihad Rail. On 23 January, the UAE cabinet announced that it had approved plans for the company to borrow up to AED4.7bn ($1.28bn) to finance the first phase of the rail scheme.

Ultimately Etihad Rail will develop a network that links in with the GCC rail scheme, but the first phase will be used by Abu Dhabi National Oil Company (Adnoc) to transport sulphur between Habshan and Ruwais. Adnoc will also be providing some form of guarantee to the loans and has appointed National Bank of Abu Dhabi to advise it on the development of the project.