NB LRS ENHANCED SUPPORT FOR MIDCAPS

The project consists in a Linked risk-sharing operation (own-resources; full delegation) to support mid-caps and public sector entities primarily based in Portugal.

Market gap / sub-optimal investment situation: The operation is launched to support the ongoing recovery of the Portuguese economy in the aftermath of the COVID-19 pandemic, followed and exacerbated by the war in Ukraine that affected Portuguese SMEs and Midcaps, which have above EU-average structural weight in the national economy and are more vulnerable to economic downturns compared to larger corporates. Project acceleration: The quick mobilisation of financing for corporates is strategic to ensure that companies continue to have liquidity to operate and contribute to the country's productive capacity for goods and services. Employment: The operation will contribute to the preservation and creation of employment in a still unstable phase of the economic cycle. Financial Support to Midcaps: The operation addresses the EIB objective of providing financial support to Midcaps, allowing for competitive and flexible financing. Cohesion: Around 64% of the operation is expected to benefit Midcaps located in cohesion priority regions.

The proposed transaction consists of a fully-delegated linked risk sharing guarantee between the EIB and Novo Banco ("NB"), a financially solid promoter and repeated counterpart of the EIB. The operation will enable NB to finance small and medium-sized investment projects in eligible sectors carried out by Mid-Caps enterprises, as well as Public Sector Entities ("PSEs"), operating mostly in Portugal.

The guarantee aims to promote and accelerate private sector investments as well as facilitating access to finance for Mid-Caps, a backbone, together with SMEs, in terms of growth and employment for the Portuguese economy. The operation will help addressing the working capital, liquidity needs and investment constrains of Mid-Caps, which have been exacerbated by supply chain constraints, inflation and raising interest rates among others. The economic impacts in the economy have been widespread as value chains have been disrupted and consumer demand has slowed down due to the high inflation rates. SMEs and Mid-Caps are facing financial stress and bankruptcies and, without continuing to address their investment needs, the adverse economic effect of the pandemic could be long-lasting also considering the recent war in Ukraine and the additional challenges for SMEs and Mid-Caps in the form of increased input costs, which cannot be fully passed to end customers, thus creating pressure on margins.

Projects financed under this operation have to comply with EU applicable legislation, as appropriate and where applicable.

Projects financed under this operation comply with EU applicable legislation, as appropriate and where applicable.