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AIIB $200m guarantee backs loan for Turkey’s green exporters 

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Published: 29 May 2024

The AIIB guarantee underpins a syndicated loan to support green projects in which Société Générale, ING and Standard Chartered Bank participated.

The AIIB guarantee and associated loan will contribute to long-term financing provided by Türk Eximbank to Turkish exporters involved in the country’s current renewable energy drive | Michael Jerrard on Unsplash

The Asian Infrastructure Investment Bank (AIIB) is providing a $200m (€184m) guarantee to Türk Eximbank, helping to facilitate a $286m syndicated loan the export bank has secured in support of its green financing plans.

The transaction is intended to support long-term financing provided by Türk Eximbank to Turkish exporters involved in renewable energy, as well as energy and water efficiency.

The 10-year loan comprises funding from  international banks, which the Beijing-based AIIB said aligned with its mission to mobilize private capital and invest in green infrastructure. Banks involved in the financing include Société Générale, ING and Standard Chartered Bank. The loan is said to fully qualify as climate mitigation finance.

The guarantee is AIIB’s first partial debt guarantee on a commercial loan transaction. The guarantee’s structure includes both euro and dollar tranches and features a first-loss guarantee alongside a pari passu guarantee arrangement. Further backing is provided by a counter guarantee from the Turkish Ministry of Treasury and Finance.

AIIB described the project as “an exemplary case” of blended financing between private sector banks and multilateral financing institutions that has enabled Türk Eximbank to mobilize long-term private capital well above the amount guaranteed by AIIB, despite challenging market conditions.

Laurent Eurin, head of Americas, Asia and Turkey at SG Development and Structured Export Finance called it a “significant milestone in blended financing between private sector banks and strategic multilateral financing institutions, in support of increasing green infrastructure financing needs”.

Türk Eximbank’s general manager, Ali Güney, said the financing was the export bank’s first transaction to be fully committed to green principals. “With this one-of a kind facility, under the guarantee of the AIIB, we will support our exporters’ renewable energy investments and green transformation activities to reduce their carbon emissions,” he said. 

Türk Eximbank is currently finalizing $1.2bn worth of long-term green financing overall, according to Güney.

News of the AIIB support came hot on the heels of the announcement earlier in May that Turkey had secured some $1bn of financing from the World Bank to help establish and expand Turkey’s market for distributed solar energy and to pilot a programme for battery storage. 

The government aims to increase solar energy capacity to 52.9 gigawatts (GW) by 2035 from 9.5GW in 2022, and boost battery storage to 7.5GW.

Institutional cooperation

AIIB was created in 2016 with Beijing’s backing as a Chinese-based partner – and counterweight – to the World Bank Group and other institutions. It specialises in leveraging private sector funds for infrastructure projects via guarantees and other instruments and has total authorised capital of $100bn. China holds the biggest voting share (26.5%), but the institution’s 109 members are spread around the world and include all G7 countries barring Japan and the US.

AIIB and the World Bank have been working together to mobilise lending against the backdrop of difficult economic conditions. 

In April 2024, the two institutions renewed an agreement to enhance collaboration on infrastructure development and support of the UN Sustainable Development Goals. In mid-2023, they said they were in talks over a possible second deal under which AIIB would provide $1bn in loan guarantees to the World Bank’s lending arm, the International Bank for Reconstruction and Development (IBRD), to boost its lending capacity.

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