SME Receivables Asset Covered Bond - Sekerbank

completed

In order to further develop and expand its lending business with micro, small and medium-sized enterprises (MSMEs), Sekerbank has launched an SME Receivables Asset Covered Bond Programme in cooperation with the arranger UniCredit. This involves the issuance of covered bonds which - similar to a mortgage bond - are secured by a pool of claims from loans from Sekerbank to private MSMEs. Sekerbank (project sponsor), which has traditionally specialised in MSMEs, will receive refinancing for its core business through the transaction. Sekerbank's programme is the first covered bond on the Turkish market. This and the additional MSME reference make the transaction highly innovative. By issuing the securities in Turkish lira (TL), a contribution is being made to the development of the local capital market, as the transaction will introduce a new asset class to the Turkish capital market. The aim is to tap into new investor groups and diversify Sekerbank's refinancing structure. To date, this has been predominantly characterised by deposits. The bonds to be issued are to be placed on the market in several series on a recurring basis. By issuing the covered bonds, Sekerbank is opening up new refinancing channels for long-term refinancing and expanding its MSME lending business. It is also expected that Sekerbank will be able to refinance more cheaply through the covered bonds than through other means. With around 300 branches nationwide and financial services tailored to MSMEs, Sekerbank also serves customers in the less developed rural regions of Eastern Anatolia. Sekerbank's covered bond program has a demonstration function and can make an important contribution to the development of the Turkish capital market. The transaction is in line with the BMZ sector concept for financial system development. Certain selection criteria (including loan amount) are defined for the MSME portfolio (cover pool) underlying the transaction. In the event of Sekerbank's insolvency, this MSME asset pool will not be part of the insolvency estate, which means that investors are particularly protected. However, the cover pool remains with the issuer, so that - in the event of insufficient satisfaction of all claims from the cover pool - the investors can make direct claims against Sekerbank. If NPLs arise in the MSME asset pools, these loans are exchanged. The covered bonds therefore represent Sekerbank risk and are additionally secured with claims from the MSME portfolio.