The Fund of Funds will provide portfolio guarantees to financial intermediaries to cover credit default losses from the designated target groups of final recipients. Most products designed by the FMFIB in that respect envisage guarantees that would cover up to 70-80% of losses incurred at the level of the individual credit facility but not more than 25% at the level of the loan portfolio (loss cap).
The purpose of guarantees is to provide an opportunity for target final recipients to use financing at more favourable pricing terms and/ or loan collateral requirements, tailored to their requirements and capacities.
Portfolio guarantees are envisaged under two of Operational Programmes with which the Fund of Funds has signed financing agreements:
- OPIC 2014-2020: Capped portfolio guarantees for innovation and energy efficiency for SMEs and large enterprises and
- OPHRD 2014-2020: Capped portfolio guarantees for micro-financing.