Garanti in TL305m green covered bond follow-up with EBRD

Garanti Bank is placing a TL305m (Eu75m) covered bond with the European Bank for Reconstruction & Development (EBRD), the Turkish bank announced today (Thursday), with a commitment to use the proceeds to lend green mortgages, in a follow-up to a similar bond placed with the IFC.

In June, Garanti Bank launched the first green-oriented Turkish covered bond, a TL530m mortgage-backed five year placed with International Finance Corporation (IFC). The issuer pledged to use half the funds invested by IFC to provide green mortgages for the purchase of energy efficient housing.

Gökhan Erün, deputy CEO of Garanti Bank, said the new deal with the EBRD will grow the stock of environmentally-friendly buildings and help develop sustainable cities.

“We attach great importance to green mortgage loans for the financing of environmentally friendly projects for highly energy-efficient buildings,” he said.

The new deal is backed by residential mortgages and rated Baa1 by Moody’s. Proceeds from the EBRD’s investment will be used to finance loans to home owners, home associations or service providers investing in improvements aimed at cutting energy consumption and reducing household bills.

“We are pleased to play a role in yet another covered bond issuance in Turkey,” said Noel Edison, EBRD director for financial institutions in Turkey. “This asset class, well established in Europe, is an excellent new funding tool for Turkish banks and, importantly, will broaden their investor base.

“We hope that more Turkish banks will follow suit as the asset class provides access to a wider range of long term investors at lower funding costs, reduces reliance on short term funding and thereby contributes to the management of balance-sheet asset liability.”