Although talks with investors were plentiful and positive, the ongoing political stalemate is an obstacle for investors
A planned Eurobonds issue will have to wait for the ongoing political stalemate within the ruling coalition to resolve itself. Representatives of Croatian government, namely Finance Minister Zdravko Marić and his team, met with potential investors in Germany and London this week in a series of “very successful meetings,” where they presented basic macro economical indicators and growing trends in economy, the reform program, fiscal and monetary politics, reports Poslovni.hr on June 1, 2016.
“Croatia will continue to monitor international financial markets with the intention of publishing planned Eurobonds after current domestic political uncertainties are dispelled,” it was written in a statement by the Finance Ministry. Finance Minister Marić explained the emission was delayed as it was “estimated the conditions could be better when everything is under absolute control, while the delay does not jeopardize or change anything in the current annual budget.”
In the beginning of May Reuters published that Croatia has hired investment banks Citigroup, HSBC, Societe Generale and Unicredit to lead the new emission of Eurobonds, with around a billion Euros value projected to be released.
Foreign financial media also stated the issue was scheduled for this week, but the statement by the Ministry denies that. Domestic banking experts note that investors need confidence in those publishing bonds so this serves as a message that the political situation needs to stabilize.
The last emission of Eurobonds by Croatia was in March of last year, amounting to 1.5 billion Euros with a 10 year maturity, 3% interest and 3.25% yield. It was then the cheapest loan Croatia achieved on international markets, attributed mostly to an extra loose monetary policy the European Central Bank has been undertaking for years.
Economics analyst Damir Novotny added that this is the first time a Eurobonds emission was delayed and “this should worry the political elite.”
