The EIB announces the entry into force of the Portfolio State Guarantee with Portugal. The final conditions precedent to the effectiveness of the Portfolio State Guarantee (PSG), originally signed on 7th December 2012 by the President of the EIB and the Minister of Finance of Portugal, were fulfilled. In fact, on 30th September 2013 documents previously signed with the relevant parties were updated to reflect the final terms of the approval by the European Commission of 27th June 2013 (http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_36180) allowing to support the Portuguese economy, notably small and medium-sized enterprises while complying with any applicable laws and regulations.
The PSG is an innovative instrument that provides an alternative to collateral, supporting both existing and new operations. The PSG ensures continued compliance with the EIB’s standard credit criteria of existing loans in Portugal. Furthermore, the portfolio covered by this guarantee may reach a maximum of EUR 6 billion, including existing and expected new exposure, and thus creating important new investment opportunities. As of now there would be a margin for new transactions in the order of EUR 2.7billion but given the revolving nature of the scheme the total flow of new transactions could be a multiple of that amount. Its immediate impact would be to unlock a considerable amount of loans and provide liquidity to the economy in support of the efforts being deployed by Portugal to foster growth and employment, especially investments promoted by SMEs.
The PSG is the first sovereign-backed portfolio guarantee of its kind. While other portfolio guarantees are limited to supporting new operations, the PSG can be considered as a ground-breaking scheme as it acts in support of both existing and new operations.