Dubai World's utilities unit has secured a Dh1.14bn line of credit to refinance an existing facility.
Palm Utilities, which supplies chilled water to homes on Nakheel's Palm Jumeirah among other developments, closed a deal that includes both a conventional and islamic tranche.
"This is a resounding vote of confidence by the financial community in Dubai's economy," said Marwan Al Naqi, chief executive of Palm Utilities. "Despite challenging regional market conditions, the facility received good response from the financial institutions."
Abu Dhabi Commercial Bank and Emirates NBD were the lead arrangers for the conventional tranche, while Emirates Islamic Bank arranged the Islamic tranche of the facility.
Analysts expect to see more such refinancing deals involving local lenders as Dubai government-related companies face billions of dollars in debt repayments this year.
"With relatively strong capital and liquidity metrics, the local Dubai banks have the potential to provide additional funding to state-owned entities," said Moody's, the international credit ratings agency in a December 6 report.
Companies that provide district cooling in the Emirates have come under pressure since the collapse of property prices in late 2008 that cut demand for their services from the new housing estates and apartment blocks they serve.
District cooling is an alternative to traditional air conditioning units and is used on almost all of the major residential and commercial property developments in the country. Chilled water is pumped through underground pipes from a central unit to cool the air within buildings in the development.