A fund operated by the European Investment Bank (EIB) has signed three new guarantee agreements with Unicredit Bulbank, United Bulgarian Bank and ProCredit Bank (Bulgaria) to support fast-growing documentary finance activity in Bulgaria.

Under the agreements the three European Investment Fund (EIF) partner banks will

finance Bulgarian small enterprises and small mid-caps with instruments such as letters of credit (L/Cs), payment guarantees, advance payment guarantees and performance bonds.

EIF guarantees

The total credit portfolio of the three Bulgarian banks under this instrument is expected to reach EUR 200 million (US$219 million).

The EIF guarantee will cover 50 per cent of the credit risk in each credit line free of charge up to a cap of 25 per cent losses in the portfolio.

Beneficiaries

The three guarantee agreements are expected to help around 4,500 Bulgarian enterprises obtain new credit products at a reduced price, with lower collateral and longer maturities.

The new instrument will address financing needs not covered by other existing guarantee facilities on the Bulgarian credit market.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.