Finance Minister Zdravko Maric said on Thursday that the latest issuance of a euro bond was successful for Croatia and added that the period of cheap money and record low reference interest rates was evidently over.

On Wednesday, the finance ministry issued a euro bond on the international market in the nominal amount of €1.25 billion due in 2032. The annual coupon rate is 2.875% and the yield 2.975%.

The money will be used to finance state budget requirements, including the rescheduling of an euro bond due in late May in the nominal amount of €1.25 billion and 3.875% in interest.

Addressing a news conference after today’s meeting of the government, Minister Marić said that there had been a strong response of financial markets to the developments stemming from Russia’s military aggression against Ukraine and to omnipresent inflationary pressures. In addition, there are announcements that reference interest rates will rise in the USA.

“That is our reality. I spoke about it some time ago, when we announced this issuance. Unfortunately, the time of cheap money and record low reference rates is over,” Marić said.

Over the recent years, the government has managed to borrow money under favourable terms and conditions, which has produced a positive impact also on entrepreneurs and citizens, Maric said, adding that now things are changing.

The minister said that taking into consideration all the circumstances and the high level of uncertainty on markets, the decision to issue the bond was made yesterday to avoid postponing it for the weeks to come, for which no one was sure what they would bring.

He said that when the demand reached nearly €3 billion, Zagreb opted for the same amount which it had presented initially, €1.25 billion, to cover the bond in that amount to mature on 27 May.

The yield and interest rates of the new bond are one percentage point lower than for the bond that is due on 27 May.

This means that we can save €12.5 million annually, which is not insignificant, said the minister.