Istanbul to Borrow $1.1 Billion to Expand Subway Rail Network

(Bloomberg) -- Istanbul Metropolitan Municipality plans to borrow 925 million euros ($1.1 billion) from several international banks to finance six underground train projects.

Executives from the city’s administration are in talks with lenders for a loan with a maturity of eight years, including a three-year grace period before payments need to be made, the municipality said in an emailed response to questions. The deal could be signed within three months, it said.

Turkey’s biggest city is investing 12.8 billion liras ($3.4 billion) to expand its rail network to ease congestion for its 15 million people. Istanbul has 150 kilometers (93 miles) of metro lines carrying 2.3 million passengers a day, which it aims to increase to 489 kilometers over the near term and 1,000 kilometers in the medium term, the municipality said. 

Potential lenders include banks from the U.S., Europe and Asia as well as international financial institutions, it said. The municipality oversees a budget of about 42 billion liras.

The loan will finance Kaynarca-Tuzla, Cekmekoy-Sultanbeyli, Umraniye-Goztepe lines on the Asian side of the city as well as Kirazli-Halkali, Basaksehir-Kayasehir and Mahmutbey-Bahcesehir lines on the European side, totaling 75 kilometers, according to the municipality.

The European Investment Bank and European Bank for Reconstruction and Development said in June they will lend 250 million euros and 88.3 million euros, respectively, to Istanbul for the 13 kilometer extension of Atakoy-Ikitelli metro line.

©2017 Bloomberg L.P.