Debt markets to play key role in supporting SL’s capital formation

• Trillion lead manages Sri Lanka’s first ‘green’ asset backed securitisation

Trillion Investments Executive Director Lakmali Wickremesooriya, Trillion Investments CEO Sampath Kulathunga, Ernst & Young Transaction Advisory Services Director Sampath Jayawardena, Deutsche Bank Head of Global Transaction Banking Tyrone Hannan, Trillion Investments Chairman Kenneth De Zilwa, Nithya Partners Associate Neomal Gunawardena and Virtual Group CEO A.I. Abdul Wahid – Pic by Bhanuka Kirinde

By Charumini de Silva

Trillion Investments Ltd. yesterday announced the completion of Sri Lanka’s first green asset backed securitisation transaction of Rs. 750 million with Pan Asia Banking Corporation PLC.

Trillion Investments Chairman Kenneth De Zilwa said: “We feel at Trillion that debt markets and the development of debt markets plays a pivotal role in supporting capital formation of the country. We are pleased to partner Pan Asia at this juncture to bring about an innovative structure.”

“With Sri Lanka now in a phase of growth debt will play a significant role in terms of asset creation and capital formation,” he said.

He further said that there is a vacuum for innovative products in the market and that they want to be involved going forward with much more innovative products. 

De Zilwa noted that the financial institutions also need to be receptive to this innovative mindset. “Hence, I commend Pan Asia for its bold move in bringing in this products and helping us to crystallise such a product for Sri Lanka for the first-time,” he added.  

Highlighting on the importance of having debt curves and instruments, he said: “Debt predominantly has been securitised paper and a couple of debentures. In Sri Lanka there is no visible debt yield curve. To create debt instruments, is not prevalent in Sri Lanka. Thus, you have to develop credit curves and thereafter instruments to trade on that and corporates also needs to list credit.”

He also commended the Government for making the right move in terms of removing the withholding tax. “This will enable the transactions to take place freer of encumbrance. As a result, we might eventually get to a point where debt can be traded.”

He asserted that at this point they were predominantly focused on the vehicle sector because of the extensiveness of carbon emission. 

However, having said that he pointed that in future with this transaction being successfully completed, they would definitely push for other sectors to be also looked at.

Noting that the transaction came through a European credit line, he said Europe was predominately looking at green asset securitisation globally. 

“From Sri Lanka’s point of view, it was on par with most market transactions but from an international lending point of view, the lending rates were fairly cheaper. So the currency risk was taken by the final lender in Europe.” 

De Zilwa went on to say that this was a great opportunity from which Sri Lanka could benefit, adding that green asset creation was essentially limited to vehicles at present. 

“In Europe you get carbon credit trading so they might have wanted to get into assets which are environmentally friendly because there is a commercial benefit. With countries like ours they will probably feel that they can put book assets and claim that credit because it could be tradable.”

When asked why carbon credit is not available in Sri Lanka, he explained that there was a framework that needed to be developed for it to be quantified and classified for eligibility for trading. It was initially done by the Ministry of Environment about three years ago, but never took off. 

The Issue was lead managed by Trillion led by its CEO Sampath Kulatunga. Deutsche Bank acts as Trustee and Administrator to the Issue, E&Y was the financial due diligence advisor and Nithya Partners acted as Legal Counsel to the Issue.

Director/CEO Dimantha Seneviratne, Head of Corporate Banking Chandrika Ranawaka, DGM/Head of Treasury Richie Dias and Head of Legal Varuni Egodage represented Pan Asia Bank at the briefing, whilst Deutsche Bank was represented by Head – Global Transaction Banking Tyrone Hannan, Nithya Partners by its Partner Neomal Goonewardena and E&Y by its Director of Transaction Advisory Services Sampath Jayawardena.

Executive Director Lakmali Wickramasooriya and Director/CEO Sampath Kulatunga also represented Trillion at the media briefing.

A. I. Abdul Wahid, a senior investment professional with extensive international exposure and experience, a former CFO – Private Equity Funds at The Abraaj Group, advised Trillion on the structure of the transaction.