Türk Eximbank II

Project Description

On June 30, 2016, MIGA issued a guarantee of US$950 million to a proposed second loan facility from a syndicate of commercial banks to Turkiye Ihracat Kredi Bankasi AS, also known as Türk Eximbank (TE). Citibank N.A., serving as the lenders’ agent bank. The guarenate is for a period for up to 11 years covering  principal and interest, against the risk of non-payment of their long-term financing to TE.

The project involves securing the funding for an increase in medium and long-term financing by TE to the Turkish export sector, including small and medium enterprises (SMEs). TE’s increased longer-term lending capacity will be met by this MIGA-guaranteed second round of US$750 million loan facility, with a 10 year tenor, by a syndicate of banks led by Citibank N.A.. The loan facility will complement TE’s other funding sources and will enable it to provide much-needed medium and long-term funds to SMEs and contribute to Turkey’s efforts to grow its export sector.

Environmental Categorization

The project is a category FI-2 under MIGA's Policy on Environmental and Social Sustainability. Similar to the facility guaranteed in 2015, this facility will be used to support medium and long-term loans for exporters including small (less than 250 employees) and medium (between 250 and 1499 employees) size enterprises. In the TE portfolio, direct lending of medium and long-term loans is concentrated mostly in medium-risk and low-risk sectors (e.g., manufacturing and services) as opposed to high-risk sectors (e.g., mining and infrastructure). The financing guaranteed by MIGA will be used to fund business activities that have a potentially limited adverse environmental or social impact, that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures. The financing guaranteed by MIGA will not be used for high-risk projects.

TE has an overall system for evaluating credit risk, which for the MIGA-guaranteed financing will include screening against a negative list that is consistent with MIGA’s Exclusion List and consideration of environmental and social risks and impacts. Given the nature of activities supported by the MIGA-guaranteed financing, the system will ensure compliance with MIGA’s Exclusion List and applicable local environmental and social laws. TE relies on the Ministry of Environment to review environmental and social impact assessments (when required) and monitor environmental compliance of investment projects. The Ministry of Environment’s review and monitoring is evidenced by provision and renewal of environmental approvals and permits. TE will also ensure ongoing compliance of its employment practices with MIGA’s Performance Standard Two on Labor and Working Conditions, and will continue to provide MIGA with an annual monitoring report summarizing the implementation of the system for managing environmental risks and impacts and the overall environmental and social performance of the portfolio.

Development Impact

The MIGA-supported loan facility is expected to allow TE to provide medium- and long term financing to exporters at cheaper pricing. This is especially relevant for SMEs, which currently lack attractive financing options.

Export strategies are an integral part of Turkey’s short and medium-term development plans. The MIGA-supported loan facility is aimed specifically at helping TE reach its credit-expansion targets for SMEs. TE’s increased lending capacity, based on the expanded resources realized through this MIGA-supported funding, enables companies operating in Turkey to maximize their export opportunities, improves the competitiveness of Turkish exports in foreign markets, and assists in job creation among Turkish exporters.