Download Islamic Syndicated Finance

Speaker Guidelines
International Islamic Banking Summit Africa 2015
TechnicalProgram2
High-quality presentations are essential for the success of the International Islamic Banking Summit Africa. To help you plan
your presentation for International Islamic Banking Summit Africa
2015, please find in this document important information
IslamicSyndicatedFinance:
Principles&CaseStudies
about the audiovisual equipment available in the meeting rooms, along with guidelines to help you prepare and deliver your
presentation.
THE SETTING
The International Islamic Banking Summit Africa 2015 will take place in the main ballroom, which is called the Nakheel
Ballroom and has a capacity of up to 300 people. The ballroom will be equipped with the following presentation equipment:
one screen
one electronic data projector
one Podium microphone
one portable presentation pointer & clicker
YOUR PRESENTATION
Here are some helpful hints for both the preparation and delivery of your high-quality talk:
The International Islamic Banking Summit Africa audience draws participants from a wide variety of regions, both from
AIMS
TableofContent
1.  Introduc,ontoSyndicatedFinance
2.  IslamicSyndicatedFinance
3.  IslamicFinanceStructuresusedinSyndica,ons
4.  Casestudies
2
AIMS
1-Introduc,ontoSyndicatedFinance
3
AIMS
OriginsofSyndica@on
  Involvesagroupofinvestorsorfinancialins@tu@onspuAngtogethertheir
resourcestoprovidefinancetothecustomer(theenduseroffunds)
  Etymology(Wikipedia):ThewordsyndicatecomesfromtheFrenchword
syndicatwhichmeanstradeunion(syndicmeaningadministrator),fromtheLa@n
wordsyndicuswhichinturncomesfromtheGreekwordσύνδικος(syndikos),
whichmeanscaretakerofanissue
  Theprac@cestartedinvariousareasofoursocietypriortospreadingtothe
financesector(radio,criminals,businesses,workers,loSery,etc.)
  MassiveexpansionofIslamicfinancemarket(neednumbers)
  Contradic@onsremainregardingthegrowthineachcountry:Malaysia(97%
penetra@on)vs.Turkey(6%)
  Largecorporateborrowersonly?
4
AIMS
Mo@va@onsforthepar@es
Banks’mo,va,ons
  Por]oliodiversifica@on
  Avoidsexcessivesinglenameexposurewhilepreservingcommercial
rela@onshipwiththecustomer
  Cangenerateaddi@onalfeeincome
  Givesaccesstonewmarkets&clients
  Itiseasiertoliquidate(sell)asopposedtoabilateral(Shariadebateabout
sellingatdiscount)
Clients’mo,va,on
  Couldobtainlargerfacili@es
  Couldobtainlongermaturi@es
  Couldbenefitfromlowercost
  Singlesetofdocumenta@on
  Dealswithonebank(agent)
5
AIMS
Evolu@onofSyndicatedFinance
  GlobalsyndicatedlendingreachedUS$2.1trillionduringthefirsthalfof2015,an8%
decreasecomparedtothefirsthalfof2014andtheslowestsix-monthperiodfor
lendingsincethefirsthalfof2013.
  Lendingac@vityduringthesecondquarterof2015sawa24%increasefromthefirst
quarterthisyear.
  Nearly4,700transac@onsclosedduringthefirsthalf,adecreaseof12%comparedto
thefirsthalfof2014.
  Hasexpandedtoalltypesoffinance(corporate,retail,projects,governments,etc.)
  Crea@onofLoanMarketsAssocia@on(LMA)
6
AIMS
MarketTrends
  Mul@-tranchefacili@esares@llthemarketnormforlargerfacili@es:Conven@onal
tranche&Islamictranche
  CentralBankscon@nuetoregulatethebankswhenitcomestoexpandingtheir
ac@vityintoIslamicbanking
  Conven@onalbankshavecon@nuouslyexpandedtheirbusinessintoIslamic
Finance,henceincreasingtheoverallpoolofliquidity
  Malaysia,SaudiArabia,UnitedArabEmiratesandKuwaitarethemain4markets
forIslamicSyndica@ons(morethan70%oftheoverallmarket)
  ProjectandInfrastructurefundingisanincreasinglypopularsectorinIslamic
syndicatedfinancing.
  Syndicatedloansareofpar@cularimportanceinemergingmarketsbecausethey
increaseaccesstofinancingfromanexternalsourceforlargecompaniesandthus
favorinvestmentinthesecountries.
7
AIMS
GlobalVolumes
8
AIMS
TypesofSyndica@on
  UnderwriSendeal
  Besteffort
  Clubdeals
9
AIMS
Roles&Responsibili@es
  Arranger/LeadBank
  AgentBank
  Securityagent/Trustee
  Par@cipa@ngbanks
10
Factorsinfluencingthestructure
  Purposeofthefinancing
  Theassetsusedtorepaytheloan
  Thenatureoftheborrower’sbusiness
  Theamountofflexibilitythatthepar@esrequire
  Thelenders’viewoftheshariacompliantnatureofthetransac@on
11
AIMS
AIMS
ProcessofSyndica@on
  Understandingtheclient’sneeds
  Agreeingonmutuallyacceptabletermsandcondi@ons/structure
  Gatheringtheinforma@on/drauingtheInforma@onMemorandum
  FormingtheSyndicateleads
  LaunchoftheSyndica@on
  Legaldocumenta@on
  FinancialClosure
12
AIMS
2-IslamicSyndicatedFinance
13
AIMS
Marketpercep@ons
  EasiertoaccesstheIslamicloansvs.conven@onal?
  Doesitrequiremoreadvancedknowledge?
  Lowercreditquality?
  Onlyforreligiousen@@es?
  Moreadvancedcountries?
  Lowercostoffinancing?
14
Islamicvs.Conven@onalSyndicatedFinance
AIMS
  Islamicsyndicatedloanshavemanysimilari@eswithconven@onalsyndicatedloans.
  Commercialconsidera@onsareusuallysimilar
  Underwri@ngelementremainsthesame,ifrequired
  Haveaccesstoawiderpoolofliquidity
  Needforaseparatebookkeepingforconven@onalbanks
  Maindifferences
  CompliancewithShariaprinciples(prohibi@ons:riba&ghararamongothers)
  Typesofbanksinvolved:conven@onalbanksandIslamicbanks
  Typesofbusinessesfinancedmaydifferastherearecertainexclusions(haram)
  RequireapprovalofShariascholars
  Selldown(parvs.discount)
15
MechanisminIslamicSyndicatedFinance
AIMS
  Par@cipa@onagreementorinvestmentagencyagreement:Agreementamong
Islamicfinanciersdescribingrightsandobliga@ons
  Onepartytointerfacewiththecustomerandthepar@es’respec@verightsand
obliga@ons
  Roleoftheleadbank
  Documenta@on
16
AIMS
IslamicFinancingMethods
  Inabroadsense,allmethodscanbegroupedin3specificcategories:
  Profit&Losssharingprinciple
  Markupprinciple
Sukuk
17
AIMS
Profit&Losssharingprinciple
  Similaritywithequityinvestmentsasthefinanciersareen@tledtoshareprofitsand
lossesoftheborrowersbusiness.
  Rateofprofitisdeterminedasapercentageandnotasalump-sumpayment
  Generally,thereisnocollateralorotherguarantees
  Directorindirectcontrolovertheborrowerexists
Mudarabah
  Banksaresolecapitalproviderstotheproject(RaabalMaal)
  Theborrowerprovideslaborandexper@se(Mudarib)
  Musharaka
  Partnershipwithrightofcontrol
  Resemblesventurecapital
  Banksarenotprovidingtheen@recapital
18
AIMS
Markupprinciple
  Returncanbecalculatedasafixedpercentageofthetotalinvestment
  Providethepossibilityofreques@ngforacollateralfromtheborrower
  Moresimilartoconven@onalmodesoffinancing
  Murabaha
  Cost-plusfinancing
  Amarkupisnego@atedbetweenabuyer(borrower)andaseller(thefinancier)
Ijara
 
 
 
 
Similartoleasing
Productleasedforaspecified@meandspecifiedsum
Nofurthercollateralisrequired
Canbeusedforlong-termfinancing
19
AIMS
Sukuk
  Isitreallyasyndica@on?
  AnIslamicbondthatisassetbased
  Theinvestorownsaninterestonarealtangibleasset
  Canbedesignedasprofitsharingaswellasmarkup
  Shariacontroversyregardingcertainstructures
20
AIMS
SyndicatedFinancingvs.Sukuks
  Initsbroaddefini@on,Sukuks(andbonds)arealsoatypeofsyndica@on
  Differen@a@onfactors:
 
 
 
 
 
 
 
Ra@ngrequirement
Tenor&size
Investorbase
Pricingmechanism
Process&cost
Timing
Liquidity
21
Considera@onforaSuccessfulSyndica@onStrategy
AIMS
Islamicsyndicatedfinancingisderivedfromthesamefundamentalno@onsandshare
someofthesamecommercialconsidera@onsasconven@onalsyndicatedfinancingin
addi@ontofewuniqueissues:
  Theabsenceofstandarddocumenta@onsimilartoLMA
  TheShariaapprovalprocessfrombanktobankmayvary
  Themethodofsyndica@onon:
  AssignmentorNova@onoftheLoans
  Modifica@onoftheLoanterms
  Par@cipa@onoftheLoan
  TimingofSyndica@on
  PresenceofaConven@onalTranche
22
AIMS
3-IslamicFinanceStructuresusedinSyndica,on
23
AIMS
MurabahaSyndica@on
SyndicateofBanks
andFinancial
Ins@tu@ons
FundingPool
Goods(immediate
Delivery)
Investment
Agent/Seller
Supplier
ImmediatePayment
DeferredPayment
(mark-up)
Goods
(immediateDelivery)
Borrower/
Purchaser
24
MurabahaSyndica@onConsidera@ons
AIMS
  Thistypeoftransac@onisbasedonaassetrequiredbytheborrowerforitsuse.
  AlsoknownasgoodsMurabaha
  InvestmentAgentwillhold@tletotheassetun@litissoldtotheBorrower.
  Shariaprinciplesrequirethatthesellerownstheassetatthe@meitisofferingto
sellit.
  Asaresult,theInvestmentAgent(and,byextension,thelenders)beartheriskof
loss,howeversobrieflyitmaybe.
  Based on the risk of loss being taken by the lender, the mark-up it charges is
treatedasprofit.
  Amountpaidbytheborrowertowardsthepurchasepriceoftheassetsareused
topay:
  TheinvestmentAgent’sfee.
  The syndicated banks for their pro rata share of the amounts they have
advanced.
25
GoodsMurabahaStructure&Applica@ons
AIMS
  Promisetopurchasebythecustomer
  Procurementofgoodsbythebankbypaymentofprice
  SaleofgoodsbythebanktothecustomeronaMurabahabasis
  DeferredpaymentofMurabahasalepricebythecustomer
  Thereturnisfixed
  Theunderlyinggoodscannotbedeliveredbeforeexecu@onoftheMurabaha
agreement
  Suitabletofinancegoodandcommodi@es,henceidealfortradefinanceaswellas
short-termandmedium-termworkingcapitalfacility
  Canalsobeusedforshorterdura@onprojectfinancetransac@ons
26
AIMS
CommodityMurabahaSyndica@on
SyndicateofBanks
andFinancial
Ins@tu@ons
FundingPool
ImmediatePayment
Investment
Agent/Seller
BrokerA
ImmediateDelivery
Deferred
Payment
ImmediateDelivery
ImmediatePayment
Borrower/
Purchaser
BrokerB
ImmediateDelivery
27
CommodityMurabahaSyndica@onConsidera@ons
AIMS
  CommodityMurabahaorTawarruqinvolvesmanyofthesamestepsasMurabaha.
  InvestmentAgentpurchasesafreelytradableassetinthespotmarketusingfunds
receivedbythelenders.
  InvestmentAgentthenimmediatelysellstheassetattheagreedmarked-upprice
totheborrowerforimmediatelydelivery.
  Borrower’s obliga@on to pay the price is deferred (payable in installment or as
bulletrepaymentatmaturityasagreedwithlenders).
  Borrower then immediately sells the asset in the spot market to a third party for
immediatepaymentagainstdelivery.
  CommodityMurabahaismostcommonlyusedfortermloanorarevolverfacilityin
Islamicsyndica@onstructure.
  This structure is the closest to a conven@onal loan structure whereby the lenders
takenorealriskonthefluctua@onoftheunderlyingassetprice.
  Although it is quite widely spread, some banks refrain from using it because they
deemitasnotfullyShariacompliant.
28
AIMS
IjaraSyndica@on
SyndicateofBanks
andFinancial
Ins@tu@ons
FundingPool
Investment
Agent/
Lessor
Saleof
Asset
LeaseandService
Agreement
Purchase
Price
Obligor/
Lessee/
ServiceAgent
29
Rental
Payment
AIMS
IjaraSyndica@onConsidera@ons
  Ijara is commonly referred to as a hybrid between an opera@ng lease and a
financiallease.
  It is a contract under which an iden@fied property or asset is leased in
considera@onofanagreedrental.
  Investment Agent uses the funds advanced by the lenders to purchase a Sharia
compliantassetfromtheborrower.
  Borrowerpaysrentalpayments(principle+profitbasedonfixedorfloa@ngrate)
  In case of fully amor@zing facility, the borrower buys back the asset for a token
sum.
  ForIjara,theborrowermusthaveassetsofsufficientvalue.
  Shariaisflexibletoallowborrowertousepoolofassetswhichitcanreplacewith
equalvalueassetsany@me.
  Assetmustbefreeofanyencumbrances.
30
AIMS
IjaraStructure&Applica@ons
  Promisetoleasebythecustomer
  Procurement(acquiring@tleandpossession)oftheassetbythebank
  Leaseagreementbetweenthebankandthecustomerforanagreedtermin
considera@onofrentals
  Paymentofrentalsbythecustomertothebankduringtheleaseterm
  Atmaturity,saleorgiuoftheassettothecustomer
  Ownershipoftheassetstayswiththebankduringtheleaseterm
  Leaseisineffectthesaleoftheusufructoftheasset
  Suitableforhomefinancing,realestate,aircrau&projectfinance
31
AIMS
MudarabaSyndica@on
SyndicateofBanks
andFinancial
Ins@tu@ons
FundingPool
Investment
Agent
(RabAlMaal)
InvestFunds
Shareinprofit
andalllosses
Fee(baseon
sharesof
profit)
Mudaraba
Project
32
Borrower
(Mudarib)
Providesexper@se
andmanagesfunds
MudarabaSyndica@onConsidera@ons
AIMS
  InMudarabapartnership,onepartycontributesmoneywhichisinvestedbythe
otherparty.
  In Syndica@on, borrower and lenders form the partnership through the
investmentagent.
  Generally,investmentagentroleisassumedbytheborrower.
  The investment agent (borrower) is not required to invest side-by-side the
lenders.
  InSyndica@ons,onebankwills@llbeartheroleoftheleadbankandcoordinator
betweenthesyndicatebanksandtheborrower
  Mudarabacanbeeither:
  A restricted Mudaraba where the lenders specify a par@cular business in
whichtheywanttheborrower(investmentagent)toinvestthefunds
  Unrestricted Mudaraba where the discre@on of investment is given the
borrower(investmentagent)
33
MudarabaStructure&Applica@ons
AIMS
  ThebankandthecustomerenterintoaMudarabacontractbackedbyabusiness
plan
  Bankprovidesfundstothecustomerforthepurposeofearningprofits
  Thecustomerinveststhefundsaspartofthebusinessplan
  Anyprofitearnedfromtheunderlyinginvestment/assetsisdistributedbetween
thecustomerandthebank(s)asperanagreedra@o
  Paymentofprofitcannotbeguaranteed
  Mudaribcanonlybeheldresponsibleifhehasbeennegligentormisconduc@ve
  Suitableforalltypesoffinancing
  Usedforprojectfinance,expansionprojects,etc.
  AlsousedforTier1andTier2capitalraisingissuances
34
AIMS
MusharakaSyndica@on
SyndicateofBanks
andFinancial
Ins@tu@ons
FundingPool
Investment
Agent
(Partner)
Shareinprofit
andlosses
Shareinprofit
andlosses
Borrower
(Partner)
Contribu@on
inkind(orcash)
Cash
Contribu@on
Musharaka
35
MusharakaSyndica@onConsidera@ons
AIMS
  Itisacontractbetweentheclientandthebankstocombinetheircapitalassetsor
to merge their services or obliga@ons and liabili@es with the aim of genera@ng
profit
  Musharaka can be of two type (1) contractual partnership and (2) Co-ownership
partnership.
  In contractual partnership, the borrower contributes tangible assets and the
lendercontributescashthroughtheinvestmentagentforthefinancing.
  Inco-ownershippartnership,bothlenderandborroweractasco-ownerandshare
risksandrewardsinpre-agreedra@os.
  InDiminishingMusharaka,theborrowergraduallybuysouttheownershiprights
ofthelender.
  Due to complexi@es involved in Musharaka, it is not readily used for Islamic
Syndica@on
  Commonlyusedforequityfinancingtransac@ons
36
AIMS
Is@snaSyndica@on
SyndicateofBanks
andFinancial
Ins@tu@ons
FundingPool
PurchasePrice
PurchasePriceplus
Premium(deferred)
Investment
Agent
Developer
Saleofdeveloped
Asset
Borrower
Saleofdeveloped
Asset
37
Is@snaSyndica@onConsidera@ons
AIMS
  Itisacontractofsaleofadescribedassettobemanufacturedorconstructedwith
anobliga@ononthepartofthemanufacturertodelivertheassettothecustomer
uponcomple@ononafuturedate/
  InvestmentAgentrequestamanufacturertomanufactureaspecificassetforthe
borrowerinexchangeforafee.
  Fund provided by the lenders is used by the investment agent to pay the
manufacturerasperpaymentscheduleagreed.
  Investment agent charges the borrower the price it pays the manufacturer, plus
agreedprofitrate.
  Borrowerisnotobligedtopurchasetheassetun@lisisdelivered
  ShariarequiresthatIs@snameetthefollowingcondi@ons:
  Manufacturer must use its own material and knowledge to produce the
assets.
  Priceandspecifica@onoftheassettobemanufacturedmustbeknownand
agreedbyborrowerattheoutset.
38
Is@snaStructureandApplica@ons
AIMS
  Bankandthecustomerenteracontractspecifyingthedetailsoftheassettobe
builtorprocuredaswellascommercialterms
  Ondeliverydate,assetishandedovertotheclient
  Paymentofpurchasepricebythecustomertothebanks,asagreed
  Incaseoffailuretodeliver,damagescanbechargedbythebuyer
  Suitableforrealestate,machinery,ships,vehiclesandaircrausfinancing
  Usedalsoinprojectfinance
39
AIMS
WakalaSyndica@on
SyndicateofBanks
andFinancial
Ins@tu@ons
FundingPool
Investment
Agent
(Muwakil)
Wakala
Capital
Wakala
Agreement
Wakala
Fees
Returnon
WakalaCapital
withProfit
Obligor
(Agent/Wakil)
WakalaCapital
Investment
WakalaInvestment
40
WakalaSyndica@onConsidera@ons
AIMS
  AnagencycontractwheretheSyndicatebanks(asprincipals)providefundsinthe
agentforinves@ngthem,ontheirbehalf,inordertogenerateprofits.
  TheBanksareknownasMuwakilwhiletheclientistheWakil
  Theagencycanbeforafixedfeeorforafixedfeeplusincen@veoutoftheearned
profit.
  TheBanksprovidefundstobeinvestediniden@fiedbusinesses
  Whilebanksareen@tledtokeepalloftheearnedprofit,aperformanceincen@ve
ispaidtotheWakil
  Incaseofloss,theprincipalbeartheloss(exceptnegligence,misconductor
breachofcontract)
  Theagentcannotguaranteeaprofitorthecapital
  Usedmainlyfortradefinance,projectfinanceandworkingcapital
  UsedalsoforTier1&Tier2capital
41
AIMS
ECAFinancing-Background
  ExportCreditAgencies(“ECA”)assistinfinancingtheexportofdomes@cgoodsand
servicestointerna@onalmarkets
  Inthelast70years,theUSEx-ImBankhassupportedmorethanUS$400billionof
USexports,primarilytodevelopingmarketsworldwide
  Amongotherthings,ECAsprovideexportcreditinsuranceforairlinesandleasing
companiesthatpurchasenewmanufacturedaircrauwithfinancing
  ECAs:AnASrac@veInvestment
  Impliedlowcreditriskassupportedbygovernmentguarantee
  [email protected]@es
  Contractualliabili@escons@tutegeneralobliga@onsofthegovernment
  TheUSEx-ImisthelargestguaranteedbondmarketwithoverUS$20bnofissuance
since2009.BothECGDandCOFACEguaranteeshavealsoseenbondstructure
products
42
AIMS
ECAFinancinginIslamicFinance
  IncreasinginterestinIslamicECAFinance.
  ECAshavetradi@onallyissuedpoliciestosupportconven@onalfinancing
instrumentsbuttheyarenowlookingatadap@ngtheirproductstoenablethemto
alsobackShariah-compliantfinancetransac@ons.
  ECAswereoriginallyexposedtoIslamicfinancethroughtheirpar@cipa@oninmul@sourcedprojectfinancings.
  AlthoughtheECAtrancheofthesefinancingsisusuallyconven@onal,theECAs
havehadtounderstandsomeoftheissuessurroundingIslamicfinanceduetothe
impactoftheseissuesoninter-creditorarrangements.Inrecentyears,someECAs
(par@cularlyEulerHermes)haveissuedpoliciesdirectlyinsupportofIslamic
instruments.
  ThenumberofECAspreparedtobackIslamicproductsdirectlyisincreasing
43
AIMS
IslamicProjectFinance
  Islamicfinancehasgreatpoten@alforuseindevelopinginfrastructureprojects.
  Givenitspreferenceforequity-basedandasset-backedprojects,Islamicfinancecan
playanimportantroleinthevitalprojectfinancesector.
  Furthermore,asmanyinfrastructureprojectsbenefitthecommunityatlarge,they
wouldsitwellwiththeideologicalunderpinningsofIslamicfinance
  Thesponsorsundertaketheconstruc@onandopera@onoftheprojectbyusinga
ProjectCompany.TheProjectCompanywillseekfundsintheconstruc@onphaseand
workingcapitalintheopera@onalphase.WhiletheequitycomponentoftheProject
Companywillcomeintheformofsharecapitalofthesponsors,therewillbeneedto
raiseaddi@onalShari’ah-compliantfundsforcomple@onoftheproject.
  Asintheconven@onalcase,theservicesofanEPCCompanywouldbeneededduring
theconstruc@onphaseandthatofanOMCompanyduringtheopera@onsphase.
Islamicfinanceforinfrastructureprojectswouldalsorequireasecuritypackage.
  Inpar@cular,thegovernmentplaysanimportantroleincreditenhancementof
infrastructureprojectsbyprovidingvarioustypesofguaranteesand/orpricesupport.
44
AIMS
IslamicProjectFinance(contd.)
  Therela@onshipsandcontractsusedamongthedifferentstakeholdersinan
infrastructuredevelopmentfinancedinaSharia-compliantwaywilldependonthe
specificprojecttypeandfinancingmodesused.
  Thefinancierscanbebanksprovidingfinancingintheformofsyndicatedfinanceor
shareholdersprovidingfundsbypurchasingthesecuri@es.
  IncaseofIslamicfinance,themodesusedwilldependonthefeaturesofthe
projectandpreferencesofthesponsorsandfinanciers.Forexample,Is@sna,Ijara,
Musharaka,etc.,canbeusedtofinancetheproject.Themodesoffinancingused
willdeterminethecapitalstructureoftheproject.
  TheIslamicmodesoffinancingusedbetweentheFundingCompanyandthe
ProjectCompanyarediscussednext,followedbyadiscussiononins@tu@onal
arrangementsandthecontractsusedbetweeninvestors/financiersandthe
FundingCompany.
45
AIMS
4-CaseStudies
46
EmiratesECGDGuaranteeSukukUS$913MM
47
AIMS
AIMS
CaseStudy-SriLankanAirlines
SriLankanAirlinesraisedUSD175millionthroughanIslamicFacilityarrangedbyMashreq
  The Facility was for 4 years, fully guaranteed by the
Govt.ofSriLanka.
  The facility was structured as a Sharia compliant
MasterPurchaseAgreementandDistribu@onAgency
Agreement. On behalf of the financiers, Mashreq
acted as an Investment Agent (“IA”) for the
transac@on. The IA acquired the rights (vouchers for
seats) from SAL for the iden@fied routes against the
proceedsofthefacility.TheInvestmentAgentwould
then appoint SAL as Distribu@on Agent to sell flying
rights(@ckets)onbehalfofthefinanciers.
  Collected money would flow to accounts pledged to
the IA and seSle scheduled installments (principal
and profit) of the facility according to a ring fenced
cashflowwaterfall.
  The funds were used for working capital as well as
capitalexpendituretoupgradetheairline’sfleet
48
KEY TERMS
Issuer
SriLankan Airlines
Obligor
SriLankan Airlines
Guarantor
Unconditional & Irrevocable
Guarantee by the Government of Sri
Lanka
Pricing Date
June 23, 2014
Currency
USD
Amount
175 million
Issuer Rating
B+(S&P), BB-(Fitch)
Status
Senior, Unsecured
Maturity
June 27, 2019
Spread Issue
MS+355 bps
Coupon
5.30%
Re-Offer Price
100%
Denominations
$200,000
Listing
SGX-ST
Mashreq’s Role
Joint Lead Manager
AIMS
Dealstructure(saleofvouchers&distribu@onagency)
Financiers
1.InvestmentAgencyAgreement
2.  Acquisi@onofVouchersagainst
paymentthroughtheMasterAirline
VoucherPurchaseAgreement
Investment
Agent
(Mashreq)
3.Distribu@onAgency
Agreement
Purchaseand
SaleUndertaking
Payment
EndUsers
4.SaleofVouchersagainstpayment
AIMS
Accountmechanics
IATA
AccountspledgedinfavoroftheFinanciers
1
Off-shore
RevenuesA/C
2
Off-shoreDebt
ServiceReserveA/
C
Off-shore
Receivables
Collec@onA/C
4
Opera,ngA/C
AccountsoutsidethecontroloftheInvestmentAgent
AccountsoperatedbytheInvestmentAgent
3
IfnoEoDorPoten@alEoD
AIMS
CaseStudy–MidfiledTerminalProject
AED4.0bn(US$1.1bn)SyndicatedFacilityintheUAErelatedtothedevelopmentofthe
MidfieldTerminalComplex(MTC)oftheAbuDhabiAirport
  MTC is a centerpiece of Abu Dhabi Airport
Company’s (ADAC) mul,billion-dollar investment
program and Abu Dhabi 2030 Vision. At 700,000
sq.m. it will be one of the largest terminals in the
regionandshallbetheprimarygatewayforairlines
opera@ng from Abu Dhabi and home to E@had
Airways,country’sna@onalcarrier.
  According to MEED, it was the largest GCC project
awarded during the course of 2012. The JV
comprisedTAV(Turkey)–CCC(Lebanon)–Arabtec
(UAE).
MashreqactedastheSoleLead,Coordinator,MLA,
Facility&SecurityAgent,Fron@ngBankandProject
AccountBankfortheSyndicatedFacility,.
  The Syndicated Facility incorporated both
Conven@onal and Islamic tranches, comprising the
full spectrum of facili@es from LeSers of Credit to
projectrelatedloans.
51
Timeline
ü 
Aug 2011: Contracting & Corporate Finance pitch
book presented to the JV in the context of the
Midfield Terminal
Project Size: AED 10.55 Bn.
Total Facility Requirements: AED 4.0 Bn.
ü 
Nov 2011: Bid bond issued by Mashreq.
ü 
May 2012: JV officially mandated Mashreq.
Syndicated Facility documentation commenced,
ü 
June 2012: JV receives paymaster award on
June 28, with 2 weeks to issue the bonds.
ü 
July 2012: Closed the Syndicated Facility
documentation successfully on July 11 (common
syndicated documentation executed by all 8
parties).
AIMS
MudarabaCaseStudy:ITFC
Beneficiary
(7)Repayment
ofSalePriceat
Maturity
(4)Paymentof
PurchasePrice
Supplier
(3)Shipment
(2)MudarabaAgreement
(5)PaymentofPurchasePrice
(6)Saleof
Shipment
(8-a)
(8-c)
(8-b)
(4-b)
(4-a)
Par@cipant
(8)Repayment
ofSalePrice
(4-c)
Par@cipant
(1)MudarabaAgreement
52
Par@cipant
CaseStudy:Construc@onofaBulkTerminalinDjibou@
AIMS
  ICDandAfDChaveprovided
financingfirUS$10MMfor
construc@onofabulk
terminalinDjibou@.
  Themarineterminalhada
capacityof1milliontonsof
yearoffarminputsand
grain.
  Itcoversanareaof42,000
m2atPortAutonome
interna@onalandis
managedbytheSDTV.
US$20MM
Sponsor
Equity
contribu@on
Djibouti
US$10MM
Syndicatedloan
(ICDUS$4MM
AfDBUS$6MM)
  Theterminalallowsthe
processingofinputsand
grainstoEthiopiaandthe
sub-region
Lowercostoffarminputs&grainsinDjibou@andEthiopiaby
reducingstoragecosts
53
AIMS
Ques,ons
and
Answers…….
54
AIMS
DISCLAIMER
This presenta@on has been prepared by Alterna@ve Interna@onal Management Services (“AIMS”) for the exclusive use of the party (the
“Recipient”) based on the informa@on provided to the AIMS customer and/or publicly available informa@on. AIMS has not independently
verifiedtheinforma@oncontainedherein,nordoesAIMSofferormakeanyrepresenta@onorwarranty,eitherexpressorimplied,astothe
accuracy, completeness or reliability of the informa@on contained in this presenta@on for any forecasts, es@mates, opinions, analysis,
projec@ons of any nature or kind. The informa@on should not be regarded by the Recipient as a subs@tute for the exercise of their own
judgment. This presenta@on may contain forward-looking statements. AIMS undertakes no obliga@on to update these forward-looking
statementsforeventsorcircumstancesthatoccursubsequenttothispresenta@on.Anyinforma@onoropinionexpressedhereinissubjectto
[email protected]@[email protected]
projec@[email protected],orshallberelieduponas,apromiseorrepresenta@onastothe
past or future. AIMS, its managing partners , partners, employees and/or agents expressly disclaim any and all liability rela@ng or resul@ng
fromtheuseofalloranypartofthispresenta@on.
Thispresenta@onhasbeenpreparedsolelyforinforma@onalpurposesandisnottobeconstruedasasolicita@onoranoffertobuyorsellor
invest in any securi@es or related financial instruments. The Recipient should not construe the contents of this presenta@on as legal, tax,
accoun@ngorinvestmentadviceorarecommenda@on.TheRecipientshouldconsultitsowncounsel,taxandfinancialadvisorsastolegaland
related maSers concerning any transac@on described herein. This presenta@on does not purport to be all-inclusive or to contain all of the
informa@on that the Recipient may require. No investment, divestment, funding, hedging or other financial decisions or ac@ons should be
basedsolelyontheinforma@oninthispresenta@on.
Thispresenta@onhasbeenpreparedonaconfiden@albasissolelyfortheuseandbenefitoftheRecipient;providedthattheRecipientandany
ofitsemployees,representa@ves,orotheragentsmaynotdisclosetoanyandallpersonsotherthanasrequiredbylaw.Distribu@onofthis
presenta@on to any person other than the Recipient and those persons retained to advise the Recipient, who agree to maintain the
confiden@alityofthismaterialandbeboundbythelimita@onsoutlinedherein,isunauthorized.
This material must not be copied, reproduced, distributed or passed to others at any @me, in whole or in part, without the prior wriSen
consent of AIMS. AIMS specifically prohibits the redistribu@on of this material and accepts no liability whatsoever for the ac@ons of third
par@esinthisrespect.
MERCI!
AIMS
Alterna,veInterna,onalManagementServices
AglobalIslamicFinancialAdvisoryPartnership
hSp://www.aims-gcc.com