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ZAGREB (Croatia), August 29 (SeeNews) - The Croatian government said on Thursday it is giving its consent to state-owned power utility Hrvatska Elektroprivreda (HEP) to issue corporate bonds in the amount of up to 1.2 billion kuna ($180 million/162 million euro).
The bonds will be denominated in kuna or euro, depending on the market conditions at the time of the sale and the most favourable borrowing price, as the issue could be sold in one or more tranches, the government said in a statement.
The papers will have a seven-year maturity, the statement added. The interest rate, the yield and the other terms will be determined at the time of the sale.
The bond issue does not require the provision of state guarantees.
The Croatian unit of Erste Bank, Privredna Banka Zagreb and Zagrebacka Banka will act as joint agents on the issue. They will receive a fee of 0.15% of the bonds' total nominal value.
The proceeds will be used for financing HEP's 2019 investment plant and for other corporate issues, the statement said.
It added that HEP plans to invest 3.69 billion kuna this year in the construction of new power production capacities and the reconstruction of existing ones. The company plans to invest in hydropower plants and in other renewable energy sources in order to raise by 50% the share of renewable energy in its portfolio.
The Croatian government controls 100% of HEP, which has a monopoly over the ownership and operation of the transmission and distribution networks in Croatia.
In March, S&P upgraded its long-term issuer credit rating on HEP to 'BB+' from 'BB'.
In May, Moody's upgraded HEP's rating outlook to positive from stable, and affirmed the company's Ba2 credit rating.
(1 euro = 7.40287 kuna)