Turkey's banking watchdog Banking Regulation and Supervision Agency (BDDK) is reportedly to prepare a plan to securitize mortgage loans through an asset-backed security system, according to BloombergHT, citing four sources familiar with the matter.
As part of the new initiative, the securitized mortgage loans will be sold at the global financial markets, BloombergHT said. The main issuer of the securitized loans will be the newly established Bank of Development.
The banks will deliver the securitized mortgage loans to the Bank of Development and the banks will be able to provide liquidity with the letter of guarantee granted to them as part of the securitization.
According to a recent announcement by the Capital Markets Board, the Bank of Development and Investment is allowed to issue asset-backed securities with a value up to TL 3.2 ($0.62)
According to another report by Turkish daily Habertürk, the BDDK's plan for an asset-backed security program involves loans provided for the projects built with public-private partnerships (PPPs). The loans granted for PPP projects are calculated at $40 billion, roughly TL 210 billion and the value of mortgage loans is estimated to exceed TL 193 billion. Briefly, the BDDK's plan will cover a TL 400 billion package.