During the signing ceremony
Leading banks from UAE successfully arranged an Islamic structured facility for the state owned carrier Sri Lankan Airlines.
Abu Dhabi Islamic Bank, Al Hilal Bank, Mashreq’s Islamic Banking Division, Mashreq Al Islami, Noor Islamic Bank and United Bank Limited arranged the facility as Mandated Lead Arrangers and Bookrunners The facility structure is as per Islamic Sharia’a principles and was subscribed in US$ and AED.
Mashreq Al Islami acted as the Coordinating Bank. For Sri Lankan Airlines, this financing marks their debut in the international syndicated loan market. The facility is repayable over a period of four years from assigned ring-fenced cash flows with suitable credit enhancements.
The signing ceremony took place in Colombo and was attended by senior management of SriLankan Airlines, some Board members and senior representatives from the Banks.
John Iossifidis, Head of International Banking Group, at Mashreq said, “The successful closure of this transaction is clear evidence of the growing acceptance of Sri Lanka credit story in international markets”. He emphasized the growing importance of Sri Lanka in the region and how Mashreq, in conjunction with its other key partner banks, have been instrumental in closing the facility despite the difficult global liquidity conditions continuing. He added, “Sri Lanka is a key strategic market for Mashreq and we are committed to working alongside our core relationship clients, to explore different forms of capital raising”.
This transaction marks an important foray in the Islamic banking space by a major corporate based in Sri Lanka and should pave the way for many similar transaction in the future. SriLankan Airlines, the national carrier of Sri Lanka, currently operates a fleet of 19 aircraft covering 60 destinations across the globe with an increasing presence in the Middle East and Asia. The successful arrangement of this facility will financially strengthen SriLankan Airlines at a time when the Government of Sri Lanka expects the airline to be a catalyst for the further growth of Sri Lanka’s economy, especially tourism and export industries.
Sri Lanka is one of the very few countries in the world that has been clocking an impressive GDP growth rate, consistently exceeding 8% p.a over the past two years leading to significant influx of tourists and visitors into the country. SriLankan Airlines, with the largest market share, in the airline business, stands to benefit from the overall upswing in the tourist inflow and business confidence in the country.