The international capital market has seen Croatia becoming an established issuer of bonds and securities since its début. The first small international bond of US$60 million issued in its local currency -- kunas --was in December 1996 and there was no looking back after that. In February 1997, Croatia issued its first Eurobond in the US dollar sector only after obtaining its first credit rating of Baa3 and BBB, from Moody's, and Standard and Poor's.
The initial Kuna bond, which was targeted at international investors, had a maturity of two years and a 12.5 percent coupon rate with an implying yield of just over 13 percent. This issue was deemed a success as it had a strong demand of currency and credit diversification. Aiming to build a benchmark in company issuance the maturity constituted an extension of the kuna yield curve.
Croatia issued its first dollar bond of a whopping amount of US $300 million in February 1997, which had fixed coupon of 7 percent and had a five year bullet. This led to a three to four times oversubscription offering diversification and bringing a new European name to the market. The lead managers geographically allocated the bonds and about half of the issue was sold in Europe, some 40 percent allocated in the United States and the rest allocated to Asian countries.
Croatia's entry in the international bond market and its debut marked the achievement of a successful macroeconomic stabilization. This led to:
• A solid economic growth rate
• A fiscal position that can be managed
• Reduction in inflation due to its strong currency
An agreement with the creditors of the former socialist republic of Yugoslavia led to a low external debt level with a strong reserve position, the diversity of its production and also its location. Croatia has indeed made a mark with its debut in the international capital market.
The initial Kuna bond, which was targeted at international investors, had a maturity of two years and a 12.5 percent coupon rate with an implying yield of just over 13 percent. This issue was deemed a success as it had a strong demand of currency and credit diversification. Aiming to build a benchmark in company issuance the maturity constituted an extension of the kuna yield curve.
Croatia issued its first dollar bond of a whopping amount of US $300 million in February 1997, which had fixed coupon of 7 percent and had a five year bullet. This led to a three to four times oversubscription offering diversification and bringing a new European name to the market. The lead managers geographically allocated the bonds and about half of the issue was sold in Europe, some 40 percent allocated in the United States and the rest allocated to Asian countries.
Croatia's entry in the international bond market and its debut marked the achievement of a successful macroeconomic stabilization. This led to:
• A solid economic growth rate
• A fiscal position that can be managed
• Reduction in inflation due to its strong currency
An agreement with the creditors of the former socialist republic of Yugoslavia led to a low external debt level with a strong reserve position, the diversity of its production and also its location. Croatia has indeed made a mark with its debut in the international capital market.
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