"Following the successful second tranche of Croatia’s largest-ever bond issue, the government looks set to line up more next year to cover maturing debt and bridge its budget deficit. While the government has taken advantage of abundant liquidity that has pushed yields down, the country’s patchy macroeconomic condition may see the cost of issuing debt edge upwards in 2015. The economy has not grown since 2008, and with hotly-contested elections due next year, deep reform seems highly unlikely."
The newspaper recalls that "on December 8, Croatia launched book-building for a 3.25bn kuna (EUR424m) tranche of a 6bn kuna local-currency bond maturing in July 2018."
"The float attracted unexpectedly high demand, with a book size of 7.6bn kuna, allowing the government to issue more than the 3bn kuna that it had initially anticipated, and achieve a final pricing of 3.64 per cent, according to a note by Erste Group. Around two thirds of the offer was mopped up by Croatian pension funds."
Thus the government hopes that the enthusiasm for its debt continues. Finance Minister Boris Lalovac said the government would look to issue a eurobond worth at least EUR1bn early next year, depending on market conditions, the FT reported.