Dubai Holding Commercial Operations Group (DHCOG), a subsidiary of Dubai Holding, has repaid a $500m bond due on 1 February.

The repayment by the company, which is owned by Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum, has been made from DHCOG’s own internal cash flow.

The bond was one of the first repayments due out of Dubai’s $11bn of debt maturing in 2012, according to ratings agency Moody’s Investor Services. DHCOG, which operates the Tecom free zone and the Jumeirah hotels chain, had said in late 2011 that it would repay the bond from its own resources.

“Steps to reduce leverage are positive, prudent debt management and following through on commitments are also positive,” says David Staples, Dubai-based managing director of corporate finance at Moody’s Investor Services.

There is more concern about how DIFC Investments, an arm of the Dubai International Financial Centre and the Jebel Ali Free Zone (Jafza) will repay debts totalling nearly $3.3bn due before the end of the year. Both companies are already working on how they will repay the bonds, but Moody’s has said that they may need external support to raise the money to pay off, or refinance, their debts.

That support could be provided by the Dubai goverment issuing soverign bonds and using the proceeds to support its government related entities (GREs). “We believe that the Dubai government is likely to issue more government bonds once global markets are settled, especially as a number of GREs – which hold a sizeable proportion of the debt – will be unable to get the same pricing as when their original debt was raised and have limited options for asset sales,” says Monica Malik, chief economist at EFG Hermes.