FMO finalized a covered bond private placement of Sekerbank to support its rural SME activities. The bond has a value of value of 192 mln Turkish Liras (50 mln USD) with a 3-year maturity. This transaction was the first FMO’s transaction with the recently introduced ‘inclusive label’, due to its link to Sekerbank’s small farmers client segment in rural Anatolia. With this transaction, FMO reaches 4,000 rural SME’s. Access to finance for this client segment in Turkey is still limited, and is a good example of how FMO contributes to the SDG 10: Reduced Inequalities.
Sekerbank is a long-standing client of FMO. This mid-sized Turkish bank has a strong focus on rural SME’s, and is one of the leading players in the green banking segment in Turkey, with its successful EKO Kredi product (energy efficiency for SME/home owners). As the first Turkish bank Sekerbank published an integrated sustainability report, and it embraced the SDG-agenda.
With this long-term local currency transaction FMO continues to position itself as a preferred partner for Sekerbank and in Turkey as a true local community financier. The product is an SME-covered bond, which has a dual recourse on the bank and on its SME-loan portfolio. The covered bond is rated Baa1 by Moody’s, and is supervised by the Turkish Capital market board. Via this bond structure credit risks are significantly reduced.
“Sekerbank is the first bank in the world that established an SME-backed Covered Bond programme. FMO was one of the first partners that supported this programme at the time of establishment of the programme in 2011 with other IFI’s and investors. With Sekerbank’s Community Banking strategy. Sekerbank is one of the most committed commercial banks to SMEs. Therefore we are grateful for the support of FMO to Sekerbank’s Covered Bond programme and the SME and agribusiness in Turkey,” commented Zeki Ȫnder, Executive Vice President Sekerbank.
“With this bond we reach 4,000 rural SME clients of Sekerbank in Turkey. This has a large impact because SME’s are the backbone of the Turkish economy and as they represent around 80% of total employment in the country. Each SME employs around 32 people. This transaction fits perfectly the Financial Institutions FMO Turkey strategy, which focuses on high impact transactions in the areas of sustainability and inclusive finance,” according to Angelica Ortiz de Haas, manager FI Europe-Central Asia-MENA.