New issue of popular bonds, enrollment from Monday, minimum investment €500

Citizens will be able to enroll in government bonds from July 1 to July 8, with a minimum investment of €500, a minimum interest rate of 3.10 percent, and the government plans to raise €750 million by issuing three-year bonds, announced Finance Minister Marko Primorac on Thursday.

There are two enrollment channels – the digital channel E-riznica and the counters of 170 Fina branches across Croatia. After receiving confirmation of the submitted offer, citizens will be able to make payments in cash, also at Fina, in bank branches and post offices, and cashless – via online banking.

Government bonds will be enrolled in two rounds, with the first, from July 1 to July 8 until 11 a.m., intended exclusively for adult individuals, citizens of the Republic of Croatia, as well as adult foreign citizens who are residents in Croatia. The investor must have a personal identification number (OIB) and an open transaction account (IBAN), a valid ID card or passport, and foreign citizens must also have a residency certificate.

One investor can enroll only one offer, and if the enrollment is done on behalf of another legally capable individual, they must also have a notarized power of attorney. When it comes to cash payments at Fina, there are no fees for payments up to €10,000, and for payments above that amount, a unique fee is charged according to Fina’s price list.

After the enrollment for citizens closes on July 8, it will open on July 10 for institutional investors and will last only that day.

Target amount of issuance €750 million

The targeted nominal amount of issuance is €750 million, including both citizens and institutional investors, and the Ministry of Finance has the option to accept a higher or lower amount than that, said Deputy Prime Minister and Finance Minister Primorac.

The minister also expects significant interest from citizens in this issuance, and there is no doubt that the interest from institutional investors will also be significant.

– In line with expectations of reducing borrowing costs, this issuance is quite attractive – assessed Primorac.

The minimum interest rate is 3.10 percent, and Primorac explained that the final market yield on the purchased bonds, that is, the coupon interest rate, will be determined after institutional investors express their interest. But as last time, to let citizens know what to expect, the minimum interest rate has been presented, which means that the coupon interest will be at least that much.

– After the institutional tranche passes, we will determine what the interest rate will be, however, it will certainly be above 3.1 percent (…) Probably not much higher, but certainly higher – said Primorac.

Maturity of the bonds on July 12, 2027

The date of issuance of the bonds will be July 12 of this year, and maturity will be July 12, 2027.

Interest will be paid once a year, due on the anniversary of the issuance date, July 12, 2025, the second anniversary, July 12, 2026, and on the maturity date of the bonds, July 12, 2027, when the principal will also be paid.

With a minimum investment of €500, citizens will be able to earn €15.50 in interest over the year, noted Primorac.

The bonds will also be listed on the Official Market of the Zagreb Stock Exchange, meaning that citizens will be able to trade them, but the yield presented today is guaranteed only if they hold them until maturity, the minister noted. However, he added, it is important for citizens to know that they do not necessarily have to hold the bonds for three years if they need financial resources earlier.

Ten-year bond without direct participation of citizens

In just over a year, this will be the fifth issuance of government securities that citizens will be able to purchase, of which the second of government bonds.

Let us remind you, from February 22 to March 1 last year, about 45,000 citizens invested €1.34 billion in two-year “popular” bonds. When three issues of “popular” treasury bills are added to that, the share of public debt held by citizens currently exceeds eight percent, and when the issuance announced today is finalized, Primorac expects that this share will significantly approach the targeted level of ten percent.

Regarding the previously announced ten-year bond, it will be issued on July 10, but it will be intended only for institutional investors, which means that citizens will not be able to participate directly through the platform. However, those who are interested will be able to participate through brokers, the minister noted.