The IFC has invested US$100mn in Turkey’s first Tier I capital bond issued by Turk Ekonomi Bankasi (TEB). This cost-effective form of funding enables TEB to expand its lending to entrepreneurs and retail customers across Turkey.
TEB privately placed the bond with IFC and has the option to either prepay the bond on its 10th anniversary, or if this option is not taken up, the bondholder can choose to convert the debt into equity.
This transaction follows on from IFC and TEB’s previous collaboration five years ago when they launched the first Turkish Tier II deal, opening up the market to subordinated transactions. “The new transaction strengthens TEB’s capital base and allows us to better serve our clients, particularly small and medium enterprises which today make up 50% of our portfolio,” remarks Levent Celebioglu, assistant general manager for financial institutions at TEB.
Shahbaz Mavaddat, IFC director for Southern Europe and Central Asia adds: “We ‘re pleased to have been involved in this first-of-its-kind transaction in Turkey. The innovative structure demonstrates IFC’s commitment to developing the region’s financial markets, improving access to finance, and meeting the needs of our clients in an effective way.”