IFC, a member of the World Bank Group, was a key investor with a EUR 50 million investment in the first covered bond issuance in Romania.
The first-ever and five-year maturity covered bond will support the development of the capital markets and pave the way for other issuers to use a new financial instrument to provide long-term financing in Romania. Covered bonds are a critical tool for mortgage lending in more developed markets as it allows mortgage lenders to issue debt instruments better rated than the issuer.
Sergiu Oprescu, Executive President of Alpha Bank Romania said “Almost 18 years after the launch of the first ever mortgage loan in 2001, Alpha Bank Romania is opening a new chapter in the Romanian banking market with this new funding tool, demonstrating once again its pioneering capabilities”.
Romania’s housing finance system could contribute more to economic growth than it presently does. The country’s 7 percent ratio of outstanding residential mortgage debt to gross domestic product is the lowest among EU countries, even lower than the emerging-market average. The average for the 28-member block is 50 percent.
Vittorio Di Bello, IFC Regional Industry Head for Financial Institutions Group in Europe and Central Asia said: “IFC is one of the anchor investors in ABR’s covered bond issuance, thus playing an important role in the Bank’s efforts to diversify its funding sources. Supporting the first covered bond issuance in the country and a top banking player on the mortgage lending market will raise investors’ confidence and pave way for other issuers to make use of this important instrument.”
IFC and Alpha Bank Romania have a growing partnership in Romania. Alpha Bank Romania is a systemically important bank, part of the Alpha Bank Group, one of the leading banks in Greece. It became the first bank to introduce mortgages in Romania in 2001 and is now one of the major mortgage lenders in the country, with a portfolio that exceeds EUR 1 billion.
In 2017, IFC provided a EUR 50 million unsecured loan to support mortgage lending and help expand access to finance for prospective home owners in the country. In 2015, IFC extended a $30 million credit trade line to Alpha Bank Romania under its Global Trade Finance Program. IFC’s support to the first ever covered bond is expected to help the lender reach out to a greater number of homeowners and further develop the local market.