Akbank is placing a TL839m covered bond with the European Investment Bank (EIB), including a TL650m six year tranche that has already settled, with a pledge to use the proceeds for lending to SMEs and mid-caps to finance green projects, following similar deals from compatriot Garanti.

Akbank announced on 3 July that it has signed an agreement with the EIB to secure funding of Eu200m equivalent in Turkish lira via the privately placed mortgage-backed deal, with the proceeds to be on-lent to SMEs and mid-caps and for the financing of the renewable energy and energy efficiency projects.

The first TL650m six year tranche settled on Friday of last week (28 July). A second tranche “will be secured in the forthcoming period”, said Akbank.

Akbank launched the first Turkish mortgage-backed covered bond in February 2015, a TL407m five year deal that was also placed with the EIB. The new deal is its first covered bond with such a green use of proceeds commitment.

Garanti Bank launched the first green-oriented Turkish covered bond in June, a TL530m mortgage-backed five year placed with International Finance Corporation (IFC), with a pledge to use half the proceeds to finance green lending. It placed a second TL305m covered bond with the European Bank for Reconstruction & Development (EBRD) in July, this time committing all proceeds to the financing of green loans.

Just one benchmark mortgage-backed Turkish covered bond has been issued to date, a Eu500m five year for VakıfBank in April 2016.