Garanti Bank announced on Friday that it is looking at issuing covered bonds, potentially becoming the third covered bond issuer in Turkey and the first to issue mortgage-backed covered bonds.

Garanti Bank ATM

“Garanti Bankası AŞ Board of Directors has authorized the Head Offices to take the necessary actions, with regard to a potential covered bond issuance, to do feasibility studies regarding such potential issuance and give necessary authorisations in order to receive consultancy and support services in this matter and to apply to Capital Markets Board and any relevant authorities in order to obtain necessary permissions for the potential issuance and to sign and deliver all letters, requests, applications, request letters for opinion, disclosures and other miscellaneous documents related thereto on behalf of the Bank,” the bank said in a statement.

An official at Garanti Bank told the Covered Bond Report that Garanti is studying data to assess the feasibility of a mortgage-backed issue to be placed on the international market.

“We think that the international covered bond market would be interested in a Turkish issue,” he said. “The project is still in its preliminary phase of  feasibility and there is no plan for issuance at this stage,” he added.

A Garanti mortgage covered bond issue would be the first of its kind in Turkey, as other Turkish lenders have been issuing covered bonds backed by SME loans.

Sekerbank inaugurated the Turkish covered bond framework in July 2011 by selling $125m equivalent of covered bonds to three investors: UniCredit, the International Finance Corporation and Dutch development agency FMO.

In November, Sekerbank announced a roadshow for the potential launch of the first publicly issued Turkish covered bond. The Covered Bond Report understands that the issuer is still pursuing the project, although no timeframe for the launch of an issue has been set yet.

Meanwhile, Turkish peer Yapi Kredi issued an inaugural covered bond issue backed by SME loans on 16 November.