Ministry of finance delegation leaves Zagreb this week for a road show through European financial capitals to promote a new issue of Eurobonds to refinance debts of the Croatian road sector. The delegation will visit London, Frankfurt, Milano, Amsterdam and Munich, to see if the sector’s EUR five billion debt can be solved without selling or concessioning the highways, basically by refinancing the amounts due “soon”.

Minister of Finance Marić stated in October in Washington that most of the budget obligations were covered in the first half of the year, freeing the space needed to focus on roads and highways where expectations are substantial.

Banking analysts noted that the issue could be a 12 to 15-year bond, and that the advisors for the issue were already selected. Meetings with investors are reportedly scheduled for Monday to Wednesday this week. Same banking circles report rumours that the bond could be out as early as the end of this week, with interest set between 2.89% to 3.3%. This will not change the public debt per se, where the road sector holds almost 13.5% or EUR 5.2 billion, but it should improve term structure and lower the interest.

RBA said that the state also plans to issue another Kuna-denominated bond in the local market. This is because some Kn 4 billion bonds issued in 2010 mature by the end of November, so the new money would be used to refinance the old debt. Again, this will have no influence on total debt but the low interest and high fiscal indicators environment seems favorable for a new issue.