COUNTRY | Turkey
REGION | Europe
SECTOR | social infrastructure
QII Principles | Principle 1 Sustainable Growth & Development, Principle 2 Economic Efficiency, Principle 3 Environmental Considerations, Principle 4 Building Resilience, Principle 6 Infrastructure Governance
QII Sub-Principles | 1: Wider economic benefits, 2: Value for money analysis, 2: Life-cycle costing, 2: Operation and maintenance, 2: Risk management, 3: Environmental Impact Assessment, 3: Disclosure of environmental aspects, 4: Resilience, 5: Social Impact Assessment, 5: Capacity and institutional building, 6: Procurement transparency, 6: Financial & debt sustainability
Total Project cost is EUR 360 mm. Total amount of bond issued was EUR 288 mm.
EBRD has provided two separate subordinated unfunded liquidity facilities for a total of EUR 89 million to support construction and operation phases of the Project.
EBRD together with the World Bank's Multilateral Insurance Guarantee Agency ("MIGA") has provided a joint credit enhancement scheme to enable the issuance of the first greenfield infrastructure project bond in Turkey.
ELZ Finance S.A. issued EUR 288 million of privately placed, euro-denominated senior secured bonds and on-lent the proceeds to its sister company ELZ Saglik Yatirim A.S. (the "Project Company").
The Project Company was awarded the 28 year concession by the Turkish Ministry of Health to design, build, finance, equip, and maintain an integrated hospital campus in Elazig with 1,038 beds - Elazig Integrated Health Campus PPP (the "Project").
Project is signed in 2016, construction completed on time and Elazig Hospital become operational during 2018.
Relevance to QII
EBRD is demonstrating new ways of financing by promoting the participation of untapped investor classes in the sector, thereby enabling the diversification of funding sources and providing depth to the financing possibilities. EBRD is also promoting the introduction of non-conventional funding solutions to finance infrastructure projects in the Bank's region, in particular debt capital market financing.
It created a new hospital, job creation and access to medical support.
The investment grade enhanced project bond tranche benefits from the support of two unfunded subordinated liquidity facilities provided by EBRD combined with political risk insurance ("PRI") policy provided by MIGA. The credit enhancement scheme has enabled Moody's to assign a Baa2 rating, two notches above the sovereign rating of Turkey at the time of the issuance. The issuance has also been certified as "green and social bond" by Vigeo EIRIS.
The Environmental and Social Action Plan (ESAP) includes mitigation measures for both construction and operation stages, consisting of requirements relating to: HR and Occupational Health and Safety (OHS) management; grievance mechanisms for construction workers, employees, patients and the public; and stakeholder engagement. The Bank will monitor the Project Company's environmental and social performance and implementation of the ESAP through a review of annual E&S reports provided by the Project Company and site visits when deemed necessary.
Project was successfully financed and Project is completed.
Name of Institution
European Bank for Reconstruction and Development