Turkey’s Şekerbank has launched the second ever Turkish covered bond transaction, TL180m (Eu73m) of issuance off a TL800m programme backed by loans to small and medium sized enterprises.

Ali Küçükcan

The covered bond was issued on Friday and sold to two investors, the European Bank for Reconstruction & Development (EBRD) and the European Investment Bank (EIB). The investors bought different series of bonds, according to Ali Küçükcan, vice president in the financial institutions department at Şekerbank. Detailed pricing was not released.

The second transaction had been planned – with the two investors – since before the launch of the first issue in July.

“We started talking about participating at about the time Şekerbank launched its first tranche,” said Dobrin Staikov, senior banker in financial institutions at the EBRD.

The EBRD invested TL60m (Eu24m) in three year bonds that will finance micro companies in less developed areas of Turkey. Staikov said that along with support for micro and SME companies, for EBRD, the Şekerbank transaction meets its goals because it combines support for a local capital markets development, which is the first of its kind, and local currency issuance.

“It’s the first asset guaranteed issuance ever out of Turkey and we wanted to support Şekerbank in this important local capital markets development,” said Staikov.

“It’s also in local currency, so there is no foreign currency mismatch because assets are also in Turkish lira.”

UniCredit was the sole arranger on the deal, as it was for the previous Şekerbank transaction.

“This was already planned, so we are very pleased that we concluded this transaction,” said Fazel Ahmed, managing director, structured capital markets at UniCredit. “Şekerbank, I believe, are very pleased, especially given that it vindicates the establishment of a programme from the outset enabling access to investor demand as it arises.”

Küçükcan at Şekerbank confirmed he was very satisfied with the pricing and amount.

He told The Covered Bond Report another issue is on the agenda, and could emerge as early as this month.

“But it might be in January,” Küçükcan said, “due to some bureaucratic stuff.”

He said the size of the next issue would be about equivalent to Eu50m.

Küçükcan said the issuer would open itself up to institutional investors “probably after the third deal”.

“We are considering doing a roadshow for institutional investors,” he aded. “But that might not be until after our third or fourth issue.”

Küçükcan noted that it is “very likely” that other Turkish banks are looking at similar transactions for next year.