Istanbul, October 16, 2017—
IFC, a member of the World Bank Group, is investing $150 million in Turkish Lira equivalent in covered bonds issued by Turkey’s Yapı Kredi Bank, to help strengthen the country’s capital markets and boost its residential mortgage sector, including green mortgages.
IFC’s investment in the issuance aims to support Turkey’s nascent covered bond market.
The bond has a five-year maturity and is issued as part of Yapı Kredi Bank’s €1 billion covered bonds program launched in 2016. At least 15 percent of IFC’s funds will be used to provide green mortgages for the purchase of energy-efficient housing.
Covered bonds are a relatively new funding instrument for Turkey’s 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 IFC’s 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 home’s 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 Group’s Country Partnership Strategy for Turkey for fiscal years 2012 to 2017, IFC has invested nearly $5 billion in private sector projects in the country.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, we delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit
www.ifc.org
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