CRKVENAC: CROATIA HAS ISSUED GOVT BONDS WORTH 500 MILLION EUROS

ZAGREB, March 14 (Hina) - Croatia has issued new government bonds worth 500 million Euros, with an interest rate of seven percent and maturity of five years, Finance Minister Mato Crkvenac told reporters on Tuesday. This amount will be used for refinancing the capital amount of Croatia's foreign debt, which falls due this year. From 6 to 10 March, a Croatian delegation, led by Deputy Prime Minister Slavko Linic and Finance Minister Mato Crkvenac, were presenting the Government's programme and new government bonds denominated in Euros in nine European financial centres. Crkvenac told reporters the demand was very high, and that the foothold of the whole operation was the Government's economic programme, particularly its draft budget. The finance minister emphasised the risk premium on the European market for Croatia has reduced by almost one half. The risk spread has decreased from 375 points in 1999 to 210 points in comparison to the German interest rate. The bonds were issued through bank syndicates including Hypo Bank, Merrill Lynch and others, and the operation was conducted by Dresdner Bank, which merged with Deutsche Bank during the operation. Crkvenac described Monday, 13 March, the day when the offer was concluded, as very dramatic considering a fall in value on almost all European stock markets by even four or more points, and considering some new political elements in the wider environment. "We had a dramatic afternoon, the transaction was about to be completed, and within an hour or two it could have become much more expensive," he said. Had these results not been achieved, the Croatian state would this year be 'on its knees' as regards its obligations incurred previously. Ckrvenac said the issuing of new Euro-bonds had been realised under the most favourable conditions and with the highest amount achieved so far, which also speaks about the quality of the state and contributes to Croatia's rating. Crkvenac believes the transaction is important also because it creates an opportunity for Croatian companies to appear on the European financial market under more favourable conditions. The government's economic programme and draft budget have received exceptional support from foreign circles, however, the Finance Minister admitted it would be more difficult to gain support for the budget in the Sabor than abroad. (hina) mm rml