Croatia plans to raise at least $500 million in its first sale of dollar-denominated bonds since October 2009, Bloomberg News reported.
Highlighting that Croatia aims to revive its economy through new external borrowing, Bloomberg states that the 10-year bonds will yield around 6.75 percent, citing a banker involved in the sale organized by British bank Barclays and American banks Citigroup and JPMorgan.
Croatia raised $1.5 billion from 10-year bonds sold in October 2009, with a yield of 7 percent, according to data compiled by Bloomberg. The price of the bonds fell for the first time in three days, increasing the yield by 17 basis points to 6.37 percent at 3:35 PM in Zagreb, according to prices from UBS AG on Bloomberg.
The agency notes that the International Monetary Fund (IMF) in June lowered its forecast for Croatia’s gross domestic product (GDP) growth in 2010 to 0 percent, down from 0.2 percent growth in April. The Croatian economy contracted by 5.8 percent last year due to a decline in exports, investment, and consumption, as well as a lower inflow of capital.
Croatia’s long-term debt has a rating of BBB, two levels above non-investment grade by credit rating agency Standard & Poor’s, and a rating of Baa3, which is the lowest investment grade, by Moody’s Investors Service. The additional yield that investors demand for holding emerging market debt, above the yield on U.S. Treasury bonds, has fallen for the second day to 3.33 percentage points, according to JPMorgan’s EMBI+ index. (H)
