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Croatia sells 1.5 bln euro ten-year bond

Author Iskra Pavlova
Croatia sells 1.5 bln euro ten-year bond Budget, finance

ZAGREB (Croatia), June 13 (SeeNews) - Croatia placed abroad a ten-year Eurobond worth 1.5 billion euro ($1.7 billion), yielding 1.324%, to refinance maturing debt, the finance ministry said.

The debt issue was sold on Wednesday with an annual coupon of 1.125%, the ministry said in a statement. Bids totalled 5.5 billion euro, some 3.7 times higher than the amount on offer.

"The latest borrowing represents Croatia's most favourable borrowing so far, in particular considering the fact it has been executed with no premium on the new issue, which is something rarely seen in global transactions this year," the statement said. "The final price is as much as 30 basis points lower than the initially announced one."

The government will use the proceeds to refinance a $1.5 billion dollar bond maturing in November, which has a 6.75% interest.

Thanks to the favourable borrowing terms at the latest bond sale, the government will save more than 500 million kuna ($76 million/67 million euro) annually, the statement explained.

The record-low borrowing costs reflect Croatia's improved macroeconomic state and the reduction of macroeconomic imbalances in the country. These also contributed to Fitch lifting Croatia's ratings to investment grade 'BBB-' from 'BB+', with a positive outlook, earlier this month.

The ministry's agents in the latest bond sale were Citigroup, Erste Group and JP Morgan.

(1 euro = 7.41384 kuna)