February 16, 2023 - Croatian citizens will be able to register for Croatian state bonds from February 22 to March 1 with a minimum deposit of 500 euros. The state plans to raise one billion euros by issuing bonds, as announced at the government session.

Registration for citizens first

Presenting the proposal for a conclusion on the acceptance of the information on the planned launch of the issuance of government bonds with the active direct involvement of the citizen sector, Finance Minister Marko Primorac said that the final preparations are being made, announcing that the bonds will be registered in two rounds, the first of which will be open to citizens from February 22 at eight o'clock until March 1 at 8 p.m., writes Index.

After that, registration for citizens will be closed, and on March 3, it will be open for institutional investors and will only last one day. Everything that citizens do not register for will remain for institutional investors. The registration will be done in bank branches, which will be the leading agents of the issuance and co-arrangers.

Maturity period of two years, minimum deposit 500 euros

The maturity of the bond will be two years, and the state plans to raise one billion euros. The minimum deposit will be 500 euros, while at this moment, it is not yet possible to say with certainty how much the coupon interest will be, but it will be above three percent, said Primorac.

"The bond will have a two-year maturity with an annual interest yield of over three percent, and the goal of the shorter maturity period is to provide citizens with the opportunity to invest in line with their previous preferences with the maximum limitation of negative market risks," the government's conclusion reads.

Primorac also mentioned that citizens would receive information about the minimum interest achieved at issue before the actual registration.

The Ministry will publish the offer document today, which will contain a general set of information. On February 20, a public invitation will be published on the pages of the Ministry of Finance and the Zagreb Stock Exchange, with more details about the issue itself, as well as about the places of registration, along with defining precisely specified bank branches, of which there will be around five hundred in the territory of the Republic of Croatia.

Citizens who will hold the bond until the maturity date are invited first

Primorac explained that the bond is a financial instrument that guarantees the buyer the payment of the coupon interest at the scheduled rate and the amount of the principal at the end of the bond's maturity. 

Bonds in general, and government bonds in particular, are among the safest forms of investment. The risk associated with investing in them is primarily reflected in the possibility of a change in the price of the bond during the maturity period.

"We can say with certainty that those who buy government bonds will achieve the expected yield if they hold the bonds until the maturity date," said Primorac.

On the other hand, citizens who cannot hold the bond until maturity and want to sell it on the secondary market may be faced with price changes. In that case, there is a certain minimal risk that they will not receive the amount they initially invested.

"Once again, I would like to encourage all those citizens who plan to participate in this issue to do so if they plan to hold the bond until the maturity date," said Primorac.

Considering the interest rates on deposits that are currently in banks, Primorac said that the benefits for citizens from investing in this type of bond are quite clear.

Plenković: A practice that exists in many other countries

Prime Minister Andrej Plenković pointed out that this issue aims to dynamize the domestic capital market, as well as send a message of confidence in government bonds, in domestic public finances, and everything that has been done through systematic work and responsible management of public finances in the past years.

"Now, as a member not only of the EU but also of the euro area and the Schengen area, with a very strong credibility, we want to enable our citizens to invest their funds, their savings, in government bonds," said Plenković.

He also said that something is being initiated that has not been a practice in Croatia until now, although such a practice exists in a number of other countries, such as Ireland, Portugal, Italy, Poland, Malta, Cyprus, and Hungary.

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