Not too long ago, Turkey's Sekerbank was a name with no resonance in the structured finance world. Then, in mid-summer, the bank issued a covered bond deal that broke two barriers. It was the first of its kind from Turkey and the first covered bond globally to be backed by SME loans. Some covered bond purists even questioned whether SME collateral disqualified an instrument from being called a covered bond, which are overwhelmingly secured by mortgage pools. Turkish law has two separate regulations, one for covered bonds backed by mortgages and another for those secured by any of a wide range of other assets.
As a first tap off a TL800 million ($432 million) program, Sekerbank's deal was sized at TL228 million. It was a club deal, with arranger UniCredit taking around â‚¬50 million, Dutch development bank FMO buying â‚¬25 million and Washington-based multilateral International Finance Corp. investing $25 million. The expected maturity was five years for the FMO and IFC tranches, and one year for the UnicCredit notes. The final maturity was eight years for all pieces.