Renewable energy company Vidullanka PLC has received a final National Long-Term Rating of ‘A+(lka)’ from Fitch Ratings for its proposed Rs. 500 million sukuk issuance, affirming strong investor confidence in the company’s creditworthiness and financial governance.
The Islamic finance instrument has been rated on par with Vidullanka’s National Long-Term Rating, as it represents a senior secured obligation of the issuer. Hatton National Bank (HNB), rated ‘AA-(lka)/Stable’, serves as the trustee for this sukuk issue. Fitch noted that Vidullanka’s ability to fulfill its obligations under the transaction documents is central to the rating.
Proceeds from the sukuk will be used to refinance existing short-term debt and fund working capital requirements, helping Vidullanka strengthen its liquidity and support operational growth. The structure requires Vidullanka, as the lessee, to make timely periodic distribution payments under an ijarah (leasing) agreement. The company is also obliged to repurchase the underlying asset at the agreed exercise price should the trustee request it, making full repayment a contractual necessity.
The sukuk is backed by project-specific assets and cash held in a designated account, placing it on equal footing with other secured obligations of the company. It holds priority over unsecured debt to the extent of the collateral. The sukuk is governed under Sri Lankan law, and while Fitch does not provide a legal opinion on enforceability, the rating reflects the agency’s view that Vidullanka will honor its obligations in full.
The issuance contains contractual clauses for asset maintenance, financial disclosures, and default triggers, such as delays in periodic payments or failure to meet repurchase obligations. The documentation also allows the trustee and its agents to inspect the assets, and non-compliance by Vidullanka may lead to a dissolution event. While Fitch does not opine on Shariah compliance, it highlights that non-compliance would be treated as a default, with the sukuk becoming immediately payable.
Any change in Vidullanka’s National Long-Term Rating will impact the sukuk’s rating. A downgrade could result from a sustained increase in net leverage above 4.0x or declining interest coverage below 1.8x, while a rating upgrade would require substantial expansion in operating scale and diversification of its power generation portfolio.
Vidullanka PLC, listed in Colombo, is a prominent player in Sri Lanka’s renewable energy sector with a total installed capacity of 51 megawatts across hydro, solar, and dendro power projects. The company operates both in Sri Lanka and Uganda, maintaining a diversified presence through subsidiaries and joint ventures.
This rating affirms Vidullanka’s growing credibility in capital markets and highlights its strategic role in supporting Sri Lanka’s renewable energy goals.