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Our Information Note on the promotion of secured bond issuances in view of the COVID-19 pandemic has been published.

Information Note:

Promotion of the issuance of secured bonds in view of the COVID-19 pandemic






The Capital Markets Board (the “CMB”) has amended its Communiqué on Secured Bonds (III-59.1) (the “Amended Communiqué) which entered into force following its publication in the Official Gazette dated 14 May 2020 and numbered 31127. In its related press release, the CMB has stated that the objective of the amendments is the promotion of the issuance and wider use of secured bonds (“SB”) in line with the 2020 annual plan of the Presidency and its efforts to combat the effects of the COVID-19 pandemic.


The Capital Markets Law No. 6362[1] defines mortgage lenders (“ML”) as joint stock companies that are incorporated for acquiring and transferring assets for housing and asset finance purposes as well as managing such assets, accepting such assets as collateral and conducting other activities deemed appropriate by the CMB.

Although there is currently no active ML in Turkey, the incorporation of an ML with the corporate title “Birlik İpotek Finansmanı A.Ş.” is on the agenda of a large consortium including the Turkish Treasury[2], certain banks and financial institutions.

According to the Amended Communiqué, issuance limits applicable to MLs will now be independent from their respective share capital amounts and will not be subjected to any other threshold. This effectively means that MLs are able to lend without restrictions.

However, the issuance limit for entities other than MLs has been determined as 10% of their total assets indicated in their financial statements prepared pursuant to CMB regulations. Pursuant to the new amendments, upon request, this ratio may be increased to 20% for banks, financial institutions (as defined in the Banking Law No. 5411[3]) and financial leasing, factoring and financing companies that have received satisfactory ratings from rating agencies (being the top three long-term investment grades).


The amendments also introduce a reduction in, and exceptions to, associated fees of the CMB.

Accordingly, no CMB fee will be charged for the issuance of SBs (irrespective of the legal status of the issuer) until 31 December 2020. After such date, CMB fees for SB issuances by MFs are still discounted to 50%.


Pursuant to the Amended Communiqué, for mortgage backed securities (“MBS”), the net value of the pool of assets backing the MBS must be greater than the value of the MBS itself in order to secure the rights of investor in case of an issuer default. The actual ratio will be determined by issuers but may not be lower than 2%.

The amendments clarify that the assets used for overcollateralisation purposes will consist of substitute assets[4] and will be recorded in the security register.


The intention behind these recent amendments is to encourage SB issuances by lowering associated costs and narrowing down restrictions as part of the efforts to combat the economic and financial stagnation caused by COVID-19. 

The exceptions introduced exclusively for MLs will assist in rendering such institutions key players in real estate financing and allow banks to increase their credit allocation through securitisation.



For more information please contact Bezen & Partners:

Yeşim Bezen (Telephone + 90 212 366 6804, E-mail [email protected])

Serdar Bezen (Telephone +90 212 366 6803, E-mail [email protected])



[1] Published in the Official Gazette dated 30 December 2012 and numbered 28513.

[2] Pursuant to the Presidential Decree published in the Official Gazette dated 25 December 2019 and numbered 30989, the Turkish Treasury will participate in the incorporation of Birleşik İpotek Finansman A.Ş. by way of a TL 500,000 share capital injection, corresponding to 5% of the entire shareholding of such ML to be incorporated.

[3] Published in the Official Gazette dated 1 November 2005 and numbered 25983 (repeating issue).

[4] The Amended Communiqué explicitly sets out the scope of substitute assets which mainly include cash and various types of bonds.