The European Investment Bank (EIB) and the Portuguese Republic today signed a Portfolio State Guarantee for up to €2.8 billion. The portfolio covered by such a guarantee could reach a maximum of €6 billion, creating a significant leeway for future transactions and investment opportunities. The bank also released €450 million to the Portuguese Republic to help meeting the objectives of the Portuguese National Strategic Reference Framework. This is the last tranche of a framework loan of €1.5 billion approved in September 2010, the largest loan the EIB has ever granted in Portugal.
Werner Hoyer, EIB President, stated: “The challenges for Portugal to rebalance its public accounts and reform the stagnant business environment are enormous. It is an extremely painful process, but I am confident and convinced that this path will be successful. The EIB is committed in assisting Portugal in these times of a challenging economic and financial environment.”
Vitor Gaspar, Minister of State and Finance, stated: “Countering financial market fragmentation is an urgent task: if this is not urgent, nothing is". He also commented: “The EIB, with its triple A rating, is ideally suited to contribute to counter financial market fragmentation. Today we agreed on a very innovative idea: the Portuguese State will provide a 20-year irrevocable portfolio guarantee worth €2.8 billion. That will enable the EIB to cover its €5 billion exposure to Portugal and provide the ground for an additional €1 billion for new operations.”
The Portfolio State Guarantee for up to €2.8 billion will be an effective alternative to other collateral hence minimising the impact on commercial banks’ liquidity and enable to restore compliance with the Bank’s standard credit criteria of a significant part of the existing EIB exposure to projects and banks in Portugal. It will also allow the continuation of EIB support to new projects in the country while maintaining credit quality. The investment portfolio covered by such a guarantee, including existing and expected new exposure, could reach a maximum of €6 billion creating a significant leeway for future transactions and investment opportunities.