Sukuk Securities

Sri Lakshman Kadirgamar, former Foreign Minister for Sri Lanka, right, confers with Minister of Information and Media, Mr. Mangala Samaraweera on July 28, 2005 in Temple Trees, Colombo, Sri Lanka. Mr. Kadirgamar died in a hospital on August 12, 2005 after being shot by a sniper near his guarded home in the capital Colombo, according to a Sri Lankan diplomat in Washington, DC. Photographer: Sebastian Posingis/Bloomberg News 28.07.2005 Temple Trees Colombo, Sri Lanka

Jan 09, 2008 (LBO) – Sri Lanka’s Peoples’ Leasing Company (PLC), the island’s top vehicle financier, plans to raise more than 500 million rupees through Shariah compliant asset-backed securities, officials said.

“There is tremendous potential for this type of product,” says People’s Leasing chief D P Kumarage.

“We have been involved in Shariah compliant products since 1995.”

The issue called ‘Sukuk’ will be structured with the help of Islamic finance specialist First Global Securities and Investec capital. In the first tranche the firms are hoping to raise between 250 to 500 million rupees.

“The meaning of ‘Sukuk’ is that it is a Shariah compliant bond or an Islamic bond, which is issued in a securitized basis,” Muhammed Thowfeek, managing director of First Global Group said.

“The Sukuk is structured in such a manner where there is an underlying asset. The return for the investor comes in from the lease rental which comes in from the asset base.”

People’s Leasing says it has already built up a portfolio of around one billion rupees of Shariah compliant assets which could be securitized.

The Colombia branch of the Deutsche Bank has been appointed as the trustee to manage th