Export Finance Intermediation Loan 2 (EFIL 2)

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Within the context of the Country assistance Strategy (CAS), the Second Export Finance Intermediation Loan Project aims at providing medium, and long-term working capital, and investment finance to private exporters, and, at contributing to further facilitating export growth in Turkey, while also improving the quality, and safety of, and access to finance, through development of financial intermediation in the Turkish private financial sector by banks, and leasing companies. The project consists of a single component - financing of sub-loans and leases, to provide medium and long-term financing for the procurement of goods and works by private exporters. The Turkiye Sinai Kalkinma Bankasi (TSKB), a privately owned investment and development bank, is the Borrower and Implementing Agency for the project, and will act in the capacity of a wholesale institution, who will on-lend the loan funds. TSKB will take the credit risk on the banks, and leasing companies selected, and, the participating financial intermediaries in turn, will make sub-loans and leases to private exporting enterprises for procurement of goods and works, in order to expand their current export volumes, or in exceptional circumstances, to enable them to retain, and maintain their current exports levels. The on-lending banks, and leasing companies will take the credit risks on the borrowing enterprises. The proven due diligence of TSKB shows it maintains a sound financial and operational structure, and is fit to undertake the financial liability of the Loan, and operational commitments to act as a project implementation unit. Using the following pre-screening criteria, selection of participating financial intermediaries will be based as follows: For the banks - 1) total assets during the last two years to exceed a minimum of US$500 million equivalent on average; and, 2) export loans-to-total loans ratios during each of the last two years (for which data is available) to exceed a minimum of 10 percent on average. For the leasing companies - 1) total lease receivables during the last two years to exceed a minimum of US$50 million equivalent on average; and, 2) new lease volume during the last two years to exceed a minimum of US$30 million equivalent on average. The creditworthiness of sub-borrowers will be assessed, subject to the minimum requirement that sub-borrowers maintain a maximum debt equity ratio of 80:20, and minimum debt service coverage ratio of 1.2:l.