Communiqué Regarding Issuance of Secured Capital Market Instruments Has Been Published

27.01.2022
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The Communiqué Regarding Issuance of Secured Capital Market Instruments (II-31/B.1) (“Communiqué”) entered into force through its publication in the Official Gazette dated 26.01.2022 and numbered 31731. The Communiqué regulates the procedures and principles with regard to the collaterals, collateral management agreements and collateral managers for the issuance of capital market instruments. Important aspects of the Communiqué can be summarized as follows:

  • During the issuance of secured capital market instruments, to ensure the issuer’s obligations, the title of the collateralized assets will be transferred to the collateral manager in accordance with the procedure prescribed in the Communiqué or a limited right in rem will be established on the collateralized assets in favor of the collateral manager for the purpose of the management, protection and preservation of the collateralized assets.
  • As per the independence requirement introduced for the collateral manager, the issuer and the collateral manager cannot be related parties.
  • Article 5 of the Communiqué lists the assets that are eligible for the collateralizing capital markets instruments. In this regard, the Article lists mortgage-backed and asset-backed securities as well.
  • The Capital Markets Board (“CMB”) can require a specific capital market instrument to be secured. Within this scope, the CMB will examine the qualifications of the issuer or the issuance and decide upon the collateralization.
  • Collateralized assets are separated from the assets of the collateral manager and cannot be seized, pledged, listed in bankruptcy estate and subject to preliminary injunction and provisional attachment even for the collateral manager’s public debts.
  • The collateral agreement which is executed between the collateral manager and the issuer must include provisions set under the Communiqué. The collateral agreement will be submitted to the CMB together with documents required for issuance ceiling application.
  • In an event of default, the collateral manager can sell the assets subject to collateral and distribute their proceeds among the investors without obligation to fulfill any prerequisites.
  • Collateral agreement will be terminated upon (i) the fulfillment of the obligation arising from the capital markets instrument, (ii) converting collateral assets into cash and distributing its proceeds (iii) if the collateral manager fails to comply with its obligations.

You may find the full text of the Communiqué here in Turkish.

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