Trillion Investments completes transaction with Pan Asia Bank

by Rohana Jayalal

With Sri Lanka now in a phase of growth, debt will play a significant role in terms of asset creation and capital formation, Chairman, Trillion Investments, Kenneth de Zilwa told a media briefing to record the completion of Sri Lanka's first green asset backed securitisation transaction of Rs. 750 million with Pan Asia Banking Corporation PLC, at the Cinnamon Grand in Colombo.

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

From Sri Lanka's point of view, it was on a par with most market transactions but from an international lending point of view, the lending rates were fairly cheap. The currency risk was taken by the final lender in Europe.

"As you can trade carbon credit in Europe they may have wanted to get into assets which are environment-friendly because there is a commercial benefit. With countries such as ours they probably feel that they can put book assets and claim that credit because it is tradable," de Zilwa said.

"There is a vacuum for innovative products in the market and the financial institutions need to be receptive to this innovative mindset. I commend Pan Asia for its bold move in bringing in this product and helping us to crystallise such a product for Sri Lanka for the first time, he said.

Debt has predominantly been securitised paper and a couple of debentures. In Sri Lanka there is no visible debt-yield curve. To create debt instruments you have to develop credit curves and, thereafter, instruments to trade on that and corporates also need to list credit, de Zilwa said.

With the removal of the withholding tax, transactions will take place free of encumbrances.

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

He said a framework needed to be developed to trade in carbon credit in Sri Lanka. It was launched by the Ministry of Environment about three years ago, but it never took off.

"We look forward to working with Pan Asia Bank in the future, and we are sure Trillion will be a part of many more firsts as we are working on a couple of innovative mandates," de Zilwa said. Pan Asia Bank was represented by Director and CEO Dimantha Seneviratne, Head of Corporate Banking, Chandrika Ranawaka, DGM and Head of Treasury, Richie Dias and Head of Legal Department, Varuni Egodage.

Deutsche Bank was represented by Head, Global Transaction Banking, Tyrone Hannan, Nithya Partners by its Partner Neomal Goonewardena and E&Y by its Director, Transaction Advisory Services, Sampath Jayawardena.

Executive Director Lakmali Wickramasooriya and Director and CEO Sampath Kulatunga represented Trillion. A. I. Abdul Wahid advised Trillion on the structure of the transaction.