Turkey’s Turkiye Garanti Bankasi (Garantibank) has issued a $225 million bond backed by diversified payment rights (DPRs) and due in 2013 in order to refinance a bond with the same maturity date and issued for $250 million in 2005.

The originator decided to retire the paper in order to dump the wrap, which was from Syncora Guarantee, formerly XLCA. Garantibank had been in talks with the insurer to cleanly unwrap the transaction without pre-paying and placing an identical bond with the same investors, said a source at the originator. Syncora, he added, “was uncooperative.”

A spokesman at Syncora declined to comment.

The investors in question only consisted of two conduits, which no doubt made the job easier for Garantibank and indicates that this route of unwrapping DPR transactions may not be easily replicable with deals that have a more fragmented pool of bondholders.

While declining to disclose the pricing of the new deal, the source said it would ultimately be a cost-saver for Garantibank and that the premium paid to XLCA was split between the originator and the conduit investors.

Garantibank issued the retired DPR bond as the H-tranche of its 2005 program. ING Capital Markets was the arranger.

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