Ministry of Finance Goes to the International Capital Market

Ahead of the maturity of the oldest Croatian eurobond worth 1.25 billion euros, the Ministry of Finance is entering the international capital market for the first time this year, and it is expected that the new issuance of eurobonds will mature in 2032.

On Tuesday, the Ministry of Finance opened the book for subscriptions for new Croatian eurobonds, ahead of the maturity of the bond worth 1.25 billion euros on May 30 of this year. This is the oldest Croatian eurobond, issued in 2014. The expected maturity of the new issuance is 2032, analysts from RBA state.

Deputy Prime Minister and Minister of Finance Zdravko Marić announced back in late February that an international bond issuance was in preparation, followed by another ‘quite large’ issuance on the domestic market in July. 

– We are currently engaged in activities to prepare the international issuance, this will be our next step and what we always do, we will try to find the best moment to enter the international market and achieve what we want, which is to refinance existing obligations under more favorable conditions compared to what we currently have – Marić emphasized at that time.

The last time Croatia entered the international capital market was in March last year, realizing two tranches of bonds – a 12-year bond, maturing in 2033, with a nominal amount of one billion euros, an annual coupon interest rate of 1.125 percent, and a yield of 1.257 percent, and a 20-year bond, maturing in 2041, with a nominal amount of one billion euros, an annual coupon interest rate of 1.75 percent, and a yield of 1.788 percent. 

At that time, Croatia secured financing for the first time for 20 years, which is the longest term in its history on the international capital market.

In the meantime, at the beginning of February this year, it issued a bond worth one billion euros on the domestic market, with a maturity of eight years, an annual yield of 1.39 percent, and an annual coupon of 1.25 percent, for refinancing maturing bonds.

By the end of the year, Croatia will have to repay the previously mentioned issuance of 1.25 billion euros in May and one billion euros in July for the bond issued in 2011, as well as a large tranche of treasury bills in May. The total borrowing plan for this year is 40.2 billion kuna.

Croatia is issuing a bond in conditions of rising reference interest rates, after a period of historically low, even negative interest rates.

– This period has come to an end for various reasons, and accordingly, we have been preparing, because nothing can last forever – Marić emphasized in February, noting that the dynamics are being monitored and that these base interest rates will go up.