The two countries entered the international markets with new bond issues this week, reporting high levels of investor interest.
Croatia’s Ministry of Finance announced on 6 March that it had successfully issued a 10-year Eurobond with a nominal value of 1.5 billion euros on the international market. Meanwhile, investor demand surpassed 8.5 billion euros.
The strong demand and the achieved final conditions of the issue are a strong confirmation of Croatia’s credibility as issuer on the international market, and of investors’ trust in the Croatian economy and public finances, especially after the entry in the eurozone and Schengen.
The country chose Deutsche Bank, J.P. Morgan, Morgan Stanley and UniCredit Zagrebacka Banka, the Croatian unit of UniCredit, as agents for the bond issue. The finance ministry reported that the subscription for the bonds was held the day before, with 180 investors from regions such as Austria, Benelux, Central and Eastern Europe, Denmark, Germany, Switzerland and the UK expressing interest in the issue.
On the same day, 6 March, Montenegrin Finance Minister Novica Vuković stated that the government had raised 750 million dollars from its first US dollar bond issue, exceeding the original plan of up to 700 million dollars amid significant investor interest. Demand totalled 4.6 billion.
We do not borrow for spending on administration but because of earlier debt that must be repaid regularly.
Vuković explained that the seven-year bond would cover previous bonds maturing in 2024 and 2025, responding to opposition accusations that the government of Prime Minister Milojko Spajić was increasing the country’s debt to finance salary and pension increases.
The Minister of Finance pointed out that the country’s first bonds in US dollars attracted new investors and would save the country about 35 million euros, as hedging in euros had been agreed. Thanks to the hedging arrangement, Montenegro would repay the bonds in euros.
Earlier in March, Gojko Maksimovic, head of financial markets at Hipotekarna Banka, released information about the planned bond issue, claiming that Montenegro intended to sell between 500 million and 700 million dollars worth of bonds, depending on investor demand.
