Dubai’s Roads & Transport Authority (RTA) is in discussions with local Emirates NBD and Dubai Islamic Bank (DIB) to borrow around $1.5bn to fund the construction of the Route 2020 metro link, according to sources familiar with the matter.

Export credit agencies will arrange a second tranche of approximately $1.5bn, the sources said, declining to be named.

The local bank tranche will have a 28-year tenor. The RTA is expected to secure preferential rates from its relationship banks, which is not likely to be syndicated. The funds will be lent to a blanket special purpose vehicle, with sovereign guarantees. 

An Emirates NBD spokeperson declined to comment. RTA and DIB did not respond to requests for comment.

RTA awarded the AED10.6bn ($2.9bn) contract to design and build the Red Line extension to a consortium of Spain’s Acciona, Turkey’s Gulermak, and France’s Alstom in June 2016.

The scheme, known as Route 2020, involves building a 15-kilometre-long line branching off the existing Red Line at the Nakheel Harbour & Tower station, between the Ibn Battuta Mall and Jumeirah Lake Towers stations. The line will also connect to Al-Maktoum International airport. About 11km of the line will be elevated, with five elevated stations and two underground stations.

State-controlled Emirates NBD and DIB have previously participated in Dubai transport sector lending, such as Emirates aircraft financing, DP World sukuk and an $800m receivables financing deal based on income from the RTA’s Salik road toll in 2011.