EBRD invests in covered bond issuance by Akbank

ISTANBUL

The European Bank for Reconstruction and Development (EBRD) is investing up to $100 million equivalent in Turkish Lira-denominated covered bonds to be issued by Akbank, in an issuance that will mark the revival of covered bonds in the country.

The proceeds will be used for on-lending to sub-borrowers implementing green economy investments, in line with the Türkiye Green Economy Financing Facility II (Türkiye GEFF II), the framework under which the transaction is taking place, the EBRD said in a statement.

In addition to promoting green financing and the transition to an environmentally sustainable, low-carbon and climate-resilient economy, the issuance will revive the covered bond market and encourage its use as a viable channel for Turkish banks to access longer-maturity TRY funding, it said.

There has not been any covered bond issuance in the country since 2019, with banks relying on short-term deposits for their local currency funding, the statement added.

The transaction will enable Akbank to diversify its funding sources and encourage other Turkish banks to resume long-term funding activities in local currency through a variety of financial instruments, according to the development bank.

For the EBRD, expanding the use of local currency funding and promoting new issuances and new instruments to deepen capital markets is one of the priorities of its work with investee economies.

The EBRD is among Türkiye’s key investors, with more than 22 billion euros committed through 489 projects and trade finance limits since 2009, mostly in the private sector.