OREANDA-NEWS. May 15, 2009. The Azerbaijani government and the International Finance Corporation (IFC) Project of Mortgage Lending Assistance in Central Asia & Azerbaijan with USD 3.2 million budget have finished discussion of the Bill on Covered Bonds which is a basis for securitization of commercial real estate mortgage sector in the country.

The IFC Project Office says that following discussion the sides managed to remove differences in their approaches towards the Bill.


“As a result, it was decided that the State Securities Committee (SSC) of Azerbaijan with support of IFC specialist Steve Batlers will elaborate the Bill and submit it for international examination,” the IFC Project said.


The Bill contains general mechanism of issue and circulation of covered bonds. Detailed order of regulation will be introduced in standard base of the SSC and Central Bank of Azerbaijan.


“In accordance with the Bill only commercial banks will have the right to issue covered bonds,” the Project Office said.


The close discussion session in Baku was held on 29-30 April. The Corporation was represented there by Steve Batlers and Viktor Mints.


Work over the Bill started in spring 2008.
Covered bonds will allow securitization of accumulated mortgage portfolio of Azerbaijani banks.


In June 2007 mortgage lending on the Azerbaijan Mortgage Fund (AMF) standards was stopped. Now domestic banks carry out mortgage lending operations at their own expense or due to raised finances. Mortgage portfolio in the country does not exceed AZN 300 million with potential estimate of AZN 1 bn.


The IFC Project is also ready to render assistance in mortgage practice of some commercial banks. It signed an agreement with the AMF and the main directions of partnership will be AMF commercialization and institutionalization.

Directions of technical assistance to domestic banks will be due diligence of banks’ mortgage practice, revealing of weak sides in this system and preparation of recommendations to liquidate problems.


Assistance will include transfer of viable schemes.


At the same time Switzerland’s State Secretariat for Economic Affairs (SECO) has refused from participation in the IFC mortgage lending assistance project in Azerbaijan for minimum 2 years because of mortgage market lack in the country.