International Finance Corporation launches bond program in Turkish Lira

ANKARA - Anadolu Agency

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The International Finance Corporation (IFC) said on June 22 it has introduced an innovative financial instrument to expand the availability of Turkish Lira financing for private enterprises in Turkey.

The IFC, a member of the World Bank Group, has become the first multilateral institution to issue lira-denominated discount notes.

The IFC issued an inaugural tranche of discount notes in the amount of 100 million liras ($37.5 million).
 “The issuance is part of a broader program to regularly issue lira-denominated discount notes and expand the availability of short-term local-currency finance for private enterprises in Turkey,” the IFC said in a statement.

The notes were issued under the IFC’s Global Discount Note Program, set up with the London Stock Exchange.

 The IFC issues discount notes in U.S. dollars and CNH, the deliverable form of the Chinese renminbi that is traded outside mainland China. The IFC is also exploring opportunities to extend the program to other emerging market currencies, where there is demand for short-term local-currency finance.

By setting up the Global Discount Note Program with the London Stock Exchange, the IFC will strengthen its London presence, promote the development of an offshore market for the lira, renminbi and dollar denominated instruments, as well as extend its cooperation with the London Stock Exchange Group, according to the statement. 

A discount note is a short-term debt obligation issued at a discount to face value. Discount notes have maturities of up to one year and are typically issued by government-sponsored agencies or highly rated corporate borrowers.

“Adding the Turkish lira as a currency to the IFC discount note program introduces a new asset class for investors seeking high-quality credit and short-term financing alternatives in the lira market,” Jingdong Hua, vice president and treasurer at IFC, said. 

“It reflects the IFC’s strategy to meet the growing demand for local-currency loans, especially at the short end of the maturity spectrum,” he added.

The IFC has supported capital markets development in Turkey by providing local currency loans since 2011 and the IFC has committed 459 million Turkish liras, or approximately $170 million, for private sector investment in the country.

The IFC also supports Turkish corporates’ entry into the capital markets, participating as an anchor investor in the bond market debuts of Şişecam, a glass and chemicals producer, and Mersin International Port, which issued the first infrastructure bond in Turkey.