LOLC Finance sets benchmark in Sukuk issuances

LOLC Finance PLC has successfully issued a Rs. 500 million (US$3.37 million) Sukuk in the domestic market, setting a precedent for corporate Sukuk issuances in South Asia, a media release from the company said.

Sukuk is commonly referred to as 'Sharia'h compliant' bond which is a fast emerging source of alternative funding often referred to as Islamic Bonds. The Sukuk Al Ijarah issuance of LOLC Finance was subscribed entirely by the Bank of Ceylon.

The proceeds of the three-year Ijarah facility will contribute to further develop the Islamic Finance capital market.

The Trustee to the issuance was HNB Custodial Services, while Trillion Securities (Pvt) Limited acted as the financial adviser, arranger and lead manager. The Legal aspect was handled by Nithya Partners, according to a press release.

Group Head, Islamic Finance, LOLC, Krishan Thilakaratne said, "As there has never been a Sukuk issuance in Sri Lanka, we had the challenge of drafting the agreements and arranging the parties. We are also building a fairly substantial Ijarah base."

General Manager, Bank of Ceylon (BOC), D.M. Gunasekera said, "The experience and the learning curve of this joint effort is one of the convergence the industry is vying for."