The Enrollment of National Bonds Has Begun

For the first time, in Croatia on Wednesday at 8 AM, the enrollment of government bonds intended for citizens, known as national bonds, has begun. The minimum investment is 500 euros, and the minimum interest rate that will be calculated is 3.25 percent annually.

The bonds will be enrolled in two rounds – the first is for citizens and lasts from today, from 8 AM, until March 1 at 8 PM. After that, enrollment for citizens will close, and on March 3, it will open for institutional investors and will last only that day.

Enrollment will take place in more than 500 branches of banks that are the leading agents of the issuance – Erste&Steiermärkische Bank, OTP Bank, Privredna Banka Zagreb, Raiffeisenbank Austria, Zagrebačka Bank – and co-arranger of the issuance, which is Hrvatska Poštanska Banka. Additionally, two banks (Erste and PBZ) have enabled enrollment of bonds through digital channels.

The state plans to raise one billion euros through the issuance of bonds, the minimum investment for citizens is 500 euros, and the maturity of the bonds is in 2025.

In the public invitation, the date of issuance of the bonds is stated as March 8, while the expected date for the inclusion of the bonds on the Official Market of the Zagreb Stock Exchange is March 9, 2023.

Interest is paid once a year

The nominal amount of one bond, or the denomination of the bond, is one euro.

Interest will be paid once a year, due on the anniversary of the issuance date, March 8, 2024, and on the maturity date of the bonds, March 8, 2025. The repayment of the principal of the bonds is one-time and is scheduled for the maturity date of the bonds.

The final terms of the issuance will be published no later than the first next working day after the expiration of the offer period. At that time, the final terms of the issuance will be published on the websites of the Ministry of Finance and the Zagreb Stock Exchange, and the notification will contain information about the total number of issued bonds, the total nominal amount of the bond issuance, and the final interest rate, as well as the manner in which the allocation of bonds to investors who are individuals was conducted.

As stated in the public invitation for the enrollment of national bonds, the final nominal amount of the issuance will be decided only after the completion of the offer period, depending on the total collected interest in the first and second rounds of bond enrollment.

– Depending on the nominal amount of the issuance, the achieved interest during the offer period, and the distribution of the achieved interest in the first round of bond enrollment and the second round of bond enrollment, the issuer may give preference in allocation to investors from the first round over investors from the second round – states among other things in the invitation.

Investors who are adult individuals and Croatian citizens, as well as adult individuals who are foreign citizens residing in Croatia, are required to pay the subscribed amount of bonds in such a way that such payment is recorded in the corresponding payment account no later than 11 AM on the next working day after the end of the enrollment period in the first round, i.e., by March 2, 2023.

Institutional investors are required to pay the subscribed amount of bonds so that the payment is recorded in the corresponding payment account no later than March 8, 2023, at 10 AM.

Allocated bonds will be delivered to investors by the Central Clearing Depository (SKDD) recording the appropriate number of issued bonds in the investors’ securities accounts, in accordance with the data recorded in the enrollment form and in the issuer’s bond register.

Investing in bonds with savings that citizens will not need in the next two years

Finance Minister Marko Primorac appealed on Tuesday to citizens to invest in government bonds the savings that they will not need in the next two years, as those who hold the bonds until maturity can be “absolutely calm and secure” that they will receive the nominal amount they invested and the coupon interest rate.

– This is primarily intended for citizens who plan to hold the bond until maturity. In that respect, they can be absolutely calm and secure that they will receive a coupon interest rate of at least 3.25 percent every year, as well as the nominal amount they invested upon maturity – emphasized Primorac.

If citizens who buy bonds intend to sell them on the secondary market, there is a possibility that they will not receive the nominal amount they invested and that this amount may be lower.

The benefit of this issuance for citizens, according to Primorac, is very clear, considering that interest rates on savings in banks, including term deposits, are relatively low compared to the interest rate that will be in the issuance of government bonds. “It will be approximately ten times higher than what citizens currently receive in banks,” emphasized the finance minister.

Care will be taken to ensure that as many citizens as possible participate in the bond issuance, so if the subscribed amount by citizens is far greater than the targeted one billion euros, “a line will be drawn” and those with significant payments will have part of the funds returned to their accounts. “This means that we will not proportionally reduce amounts for everyone. The point is to have as many citizens as possible participate in the issuance,” said Primorac, adding that the goal is to enable citizens with smaller amounts to maximize their enrollment.