Palm Utilities, a subsidiary of Dubai World, has completed a AED1.14bn ($310m) seven-year loan deal raised from a group of local banks to refinance existing debt.
The company, which provides district cooling for buildings around Dubai, raised the money in two tranches. Abu Dhabi Commercial Bank and Emirates NBD led a conventional tranche and Emirates Islamic Bank, a subsidiary of Emirates NBD, led the Islamic financing.
The company said the success of the deal was a sign that sentiment towards the emirate was improving after the financial crisis of 2009 forced government-owned Dubai World to restructure about $25bn of debt.
Bankers in Dubai said the deal indicates local lenders are playing a more prominent role in refinancing quasi-government debt over the next year or so, as the government tries to refinance about $10bn of debt by the end of the year. Emirates NBD took over Dubai Bank in October 2011 as part of a government rescue of the troubled bank.
Earlier in March, another state-owned company Jebel Ali Free Zone (Jafza), proposed a plan to refinance a $2bn sukuk (Islamic bond), that matures in November. The sukuk is identified as one of the most potentially troublesome of Dubai’s upcoming debt maturities.