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Turkey,United States : IFC Helps Diversify Capital Markets in Turkey; Increase Energy Efficiency
Publish Date : 20-Oct-2017
IFC, a member of the World Bank Group, is investing $150 million in Turkish Lira equivalent in covered bonds issued by Turkeys Yap Kredi Bank, to help strengthen the countrys capital markets and boost its residential mortgage sector, including green mortgages.
IFCs investment in the issuance aims to support Turkeys nascent covered bond market. The bond has a five-year maturity and is issued as part of Yap Kredi Banks 1 billion covered bonds program launched in 2016. At least 15 percent of IFCs funds will be used to provide green mortgages for the purchase of energy-efficient housing.
Covered bonds are a relatively new funding instrument for Turkeys capital markets. They offer an attractive funding cost and are viewed as low-risk investments since they are backed by the assets of the issuing banks.
With this financing, we are addressing some of IFCs key development priorities in Turkey capital markets development, climate change and sustainable cities, said Manuel Reyes Retana, IFC Director, Financial Institutions Group for Europe, Middle East and North Africa. Diversified and innovative funding instruments in Turkish Lira help to deepen capital markets, boost financial inclusion and increase investor confidence. Green mortgages also offer better borrowing rates, while helping to save energy costs.
Green mortgages increase the purchasing power of buyers by folding in the costs of the homes improvements. Buyers can thus pay for features that lower utility bills, while banks can offer new loans. Yapi Kredi Bank expects its green housing loans portfolio to be worth $250 million by the end of 2021.
IFC has supported private sector development in Turkey for 50 years, and the country is the second-largest exposure for IFC globally. In line with the World Bank Groups Country Partnership Strategy for Turkey for fiscal years 2012 to 2017, IFC has invested nearly $5 billion in private sector projects in the country.
