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.
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,