Bloomberg - Sri Lankan renewable energy producer Vidullanka Plc is planning to sell the nation’s first publicly listed Sukuk bond in coming weeks after efforts by the local bourse to kick start an Islamic finance market.

Vidullanka, listed on the Colombo Stock Exchange, is seeking to raise 500 million Sri Lankan rupees ($1.7 million), with the potential to upsize the deal based on investor demand, according to people with knowledge of the matter who asked not to be identified discussing private information. Fitch assigned in March an expected local rating of A+ to the potential offering.

The clean energy company didn’t immediately reply to phone and email requests for comment.

Fitch in February said that it expects outstanding global Sukuk issuance to surpass $1 trillion in 2025 after a 10% increase last year, and for Islamic finance to be a significant funding tool in emerging markets. Indonesia, and Malaysia are already some of the largest jurisdictions for Sukuk issuance, according to a recent report from the World Bank, and both Asian governments have outstanding dollar-denominated Sukuk.

The Sri Lanka government underwent a historic default in 2022 but Moody’s Ratings and Fitch raised the country’s credit ratings late last year after the sovereign gained support from private creditors to restructure $12.6 billion of dollar debt. The nation’s economy expanded 5.4% in the three months to December, faster than expected, as growth rebounds with the help of International Monetary Fund loans.

Proceeds from Vidullanka Sukuk offering will be used to refinance short-term loans and for working capital requirements, according to Fitch’s statement. The company’s power projects include solar, hydro and biomass.