The Croatian government decided at a meeting on Thursday to issue ten-year bonds in the amount of 3.5 billion kuna and 350 million euros in the kuna equivalent on the domestic market.
The annual interest rate will be 6.75 per cent for the kuna bonds and 6.50 per cent for the euro bonds issued in the kuna equivalent.
"We don't want to give a wrong impression that Croatia is borrowing another six billion kuna, because those funds will mostly be used to reschedule the liabilities falling due in the coming months," Finance Minister Ivan Suker said.
He specified that the bond issue would be used to reschedule three billion kuna of bonds that were issued in 2005 at the same interest rate of 6.75 per cent, but whose maturity was shorter, and to change the debt structure by replacing short-term debts with long-term ones.
The three billion kuna of bonds fall due on March 8.
The fresh bonds are to be paid for by March 5 this year and they fall due on March 5, 2020. The bond issue is managed by Erste & Steiermaerkische Bank, Privredna Banka, Raiffeisenbank Austria and Zagrebacka Banka.
