Finance Minister Zdravko Marić reported on Wednesday that the process of issuing a domestic bond on the domestic financial market in the amount of 10.5 billion kuna has just been completed.
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“Thus, as stated in the budget passed by the Croatian Parliament, we have planned the issuance of a domestic bond in the amount of 10.5 billion kuna for 2018,” said Marić in Varaždin after a meeting with representatives of the Association of Cities and the Association of Municipalities chaired by Prime Minister Andrej Plenković.
He notes that the largest part of this issuance will be used to refinance a domestic bond maturing on July 10 in the amount of six billion kuna.
“There are two tranches of this issuance. The longer tranche is 11 years, amounts to five billion kuna with a yield of 2.58 percent, while the shorter issuance is five years, worth 5.5 billion kuna, with a yield of 1.22 percent. When we look at the entire issuance, it is weighted slightly below 1.9 percent, which, when compared to this bond we will refinance, means a saving of 200 million kuna on an annual basis,” Marić stated to reporters.
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He added that this is yet another indicator of the state of public finances, but also of the domestic financial industry, as the interest in this bond was nearly 16 billion kuna, from pension funds, investment funds, insurers, to banks and other investors.
The Ministry of Finance today offered bonds on the domestic market maturing in 2023 and 2029, ahead of the maturity of 6 billion kuna on July 10.
Given the liquidity surplus of 24.5 billion kuna, analysts expected solid investor interest.
Along with the issuance of a euro bond in the amount of 750 million euros last month, which will close the maturity of the same amount on July 9, the Ministry of Finance will cover all financing needs for this year with today’s issuance.
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Croatia successfully refinanced a euro bond on the international capital market in early June in the total amount of 750 million euros, maturing in 10 years, in 2028. The annual coupon interest rate is 2.7, and the achieved yield is 2.89 percent. This issuance will save 250 million euros over ten years, it was stated.
The maturity of the kuna bond of 6 billion kuna is on July 10. It was issued in two tranches, the first tranche on July 10, 2013, in the amount of 2.75 billion kuna, and the second on December 10, 2014, in the amount of 3.25 billion kuna, both at an interest rate of 5.25 percent per annum.
