The Turkey Development and Investment Bank (TKYB) on Thursday signed a memorandum of understanding (MoU) worth 100 million euros ($112 million) with Agence Francaise de Developpement (AFD) for a private placement of bond issuance.
The signing ceremony of the agreement was held at the French Palace in the Turkish metropolis Istanbul with the participation of the French Consul-General in Istanbul Oliver Gauvin; AFD Balkans, Middle East and Asia Director Philippe Orliange and TKYB General Director Ibrahim Öztop.
The bond will be structured in line with TKYB's Green Sustainable Bond Framework demonstrating the lender's strong commitment to the United Nations' Sustainable Development Goals.
The framework to be prepared by the TKYB with the technical support of the AFD prior to the issuance will be compatible with the International Capital Markets Association’s Green Bond Principles and Sustainability Bond Principles. The TKYB will use at least 75% of its bond revenues to finance green projects in Turkey that contribute to combating and adapting to climate change.
Gauvin, speaking at the ceremony, said his country "is pleased to have the opportunity to support the first sustainable bond issuance of the TKYB that will contribute positively to Turkey's transition to a low-carbon energy system in line with the Paris Agreement," which was most recently approved by Turkey’s Parliament.
Öztop, meanwhile, emphasized that the deal is not just a bond issuance, but it is the lender’s first-ever eurobond issuance in its 46-year history.
"Eurobond issuance is important in terms of a variety. It plays an informative role for us to reach a larger investor network in the future," he added.
Orliange, for his part, said, "AFD’s strategy in Turkey is to support the country’s transition to a low-carbon energy system by providing financing via banks and foreign direct investments (FDIs)."
Turkey’s fight against climate change requires huge investment, he said adding that the public funds or bank credits would not suffice.
Thus, Orliange said, bond markets have an important role in mobilizing the financial resources of both public and private investors.
"This first sustainable bond issuance will support the bank's strategy to diversify its funding sources and accompany TKYB's future access to green and sustainable bond markets in line with its sustainable finance growth target," Orliange said.
The financing is also expected to further strengthen the bank’s Technical Assistance Program as well as the analysis of its projects regarding gender equality, he added.