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Nov 29 2018

Turkey to free up lending with asset-backed securities sale

Turkey’s government plans to free up lending by state-run banks via a sale of asset-backed securities, Gazete Duvar said.

Turkiye Kalkinma ve Yatirim Bankasi, the state-run development bank, will offer 3.15 billion liras ($610 million) of the debt on Dec. 4-6 after taking on mortgage loans of three state-owned banks, the website reported. Several Turkish securities houses including Aktif Yatrim and Garanti Yatirim will help carry out the deal, it said.

The government is seeking to free up lending to the economy after a currency crisis ravaged economic activity and caused banks to cut back on loan approvals.

The five-year securities will be sold to investors in return for a quarterly fixed coupon payment. The investment will probably carry government-backed repayment guarantees, the website said.

The three banks with the mortgage loans – Halkbank, Ziraat Bank and Vakifbank -- will also pledge to buy back the debt, with interest, within one year of sale, Gazete Duvar said.