The European Investment Fund (EIF) has signed three new guarantee agreements with Unicredit Bulbank, United Bulgarian Bank, and ProCredit Bank (Bulgaria) to support documentary finance activity in Bulgaria.
Bulgaria’s Ministry of Economy and the EIF have decided to launch this pilot guarantee product using reflows under the Joint European Resources for Micro to Medium Enterprises (JEREMIE) initiative in Bulgaria. The new instrument will address financing needs not covered by other existing guarantee facilities on the Bulgarian credit market.
The three guarantee agreements signed today are expected to help around 4 500 Bulgarian enterprises obtain new credit products at a reduced price, with lower collateral and longer maturities.
Following these agreements, the three EIF partner banks will finance Bulgarian small enterprises and small mid-caps with documentary credit lines such as letters of credit, payment guarantees, advance payment guarantees, performance bonds and other. The total credit portfolio of Unicredit Bulbank, United Bulgarian Bank and ProCredit Bank (Bulgaria) under this instrument is expected to reach EUR 200 million, according to the official press release.
The EIF guarantee will cover 50% of the credit risk in each credit line free of charge up to a cap of 25% losses in the portfolio.
JEREMIE (Joint European Resources for Micro to Medium Enterprises) is a joint initiative launched by the European Commission (Directorate-General for Regional and Urban Policy) and the European Investment Bank Group to improve access to finance for SMEs in the European Union (EU) within the Structural Funds framework for the period 2007-2013.
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