MBR-partitioned HDD: How to encrypt Time Machine backup?
I think what you could do is creating a encrypted disk image on the external HDD and put your time maschine files in it for the timeframe your friend has the disk. To achieve this open the disk utility tool and choose File -> New -> Blank Disc Image (or Image From Folder).

BUT keep in mind that as long as this disk is not (re-)formatted properly it will be easy to recover unencrypted data which seems to be deleted or moved (using some fancy recovery tools).