Bald Spot

June 19, 2006 (LBO) – A new securities law giving legal muscle to companies who raise debt by securitising the assets are likely to come through this year as part of a government lending agreement with the Asian Development Bank. Securitisation process which uses future cashflows to back a debt instrument, has been carried out for years in Sri Lanka sans any specific legal framework.

The draft law that’s in the making, will empower the securities regulator to supervise transactions and ensure the issuers and borrowers get a fair deal.

“We are working on filling the gaps on issues like corporate tax, stamp, duties, laws covering parate executions to ensure gray areas are covered when the Securitisation Act is comes into force,” Securities & Exchange Commission Director General, Channa de Silva said Monday.

Regulators are also keen to make securitised instruments publicly traded.

“At the moment there are some legal gaps in structuring asset securitisation transactions, which have made some deals look risky,” he says addressing participants at a Securitisation conference organized by Lanka Rating Agency.

Industry players have been pushing for a Securitisation Act for years, to clear uncertainty surrounding