Turkey’s Garanti Bank is in discussion with the Overseas Private Investment Corp. (OPIC) over receiving straight funding or a guarantee in a deal that could potentially be a structured transaction, said two sources familiar with the process.

While the talks are preliminary, both sources also said that the transaction might involve a unit of MBIA Inc as a re-insurer.

OPIC has a mandate to include the participation of the U.S. private sector in its projects. When OPIC provided an $100-million facility to Garanti Bank last December for SME lending, the Turkish bank was partly owned by GE Capital, a unit of General Electric Company, one of the sources said. GE Capital was the “U.S. sponsor of the project,” OPIC said in a press release at the time.

But since then, GE has sold its stake in Garanti to Spain’s BBVA. The Turkish bank no longer has a stakeholder that would fit OPIC’s criteria for U.S. private sector participation, the sources said. Hence the possible participation of MBIA.

Officials from MBIA and Garantibank declined to provide comment and an OPIC spokesperson did not reply to questions before press time.

The sources said the potential financing from OPIC could be a plain vanilla loan or could involve a guarantee on a deal backed by diversified payment rights (DPRs), the collateral that large Turkish banks have long tapped to secure cheaper, long-term funding.

Last year, OPIC and MBIA were jointly involved in a transaction for an entity of the State of Mexico known as IFREM. (Click here for the ASR link to that story.) OPIC guaranteed an A tranche for Ps 2.77 billion ($214 million), and MBIA Insurance Corp. insured up to 30% of that exposure.

MBIA Insurance is rated ‘B3’ by Moody’s Investors Service and ‘B’ by Standard & Poor’s. Another guarantor unit of MBIA, National Public Finance Guarantee Corp., is rated ‘Baa1’ and ‘BBB’, respectively.

In June, Garanti issued a $297 million-equivalent deal backed by DPRs. For the ASR story on the transaction, click here.

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