Croatia raises 364-day kuna bills offer as yield stay at historical low of 0.45%

Croatia raises 364-day kuna bills offer as yield stay at historical low of 0.45%
By bne IntelliNews May 30, 2017

Croatia sold HRK1bn (€135mn) worth of kuna-denominated 364-day bills at an auction on May 30, according to a statement from the finance ministry.

The finance ministry’s kuna bills offer was higher than the planned HRK700mn thanks to strong demand of HRK1.31bn as yields remained flat at a historic low of 0.45% for the seventh consecutive auction.

So far, Croatia has raised a total of HRK11bn through kuna denominated and €20mn via euro denominated T-bills auctions this year.

Croatia's better than expected macroeconomic performance supported the outlook for the Adriatic country’s borrowing performance in 2017. Improved financing conditions on the domestic financial market were expected to continue despite the unexpected coalition split last month.

Following the auction held on May 30, the Adriatic country’s kuna denominated short-term (less than one-year) debt stock rose to HRK17.91bn while euro denominated short-term debt stock remained at €103.6mn.

At the previous T-bill auction held on May 30, Croatia sold HRK400mn (€54mn) worth of kuna-denominated and €20mn worth of euro-denominated 364-day bills.

All three major rating agencies, Moody’sFitch and Standard & Poor's, rate Croatia at two notches below investment grade with stable outlooks.

Croatia raised HRK3bn with a cost of 2.25% via five-year bonds and another HRK5.5bn with a cost of 2.875% via 10-year domestic bonds in early February to refinance a maturing HRK5.5bn 10-year bond. Last month, the Croatian finance ministry also sold €1.25bn worth of 10-year Eurobonds with an actual yield of 3.20% and a coupon rate of 3%.

Croatia raised a total of HRK8.5bn via five-year and 10-year domestic bonds in early February to refinance a maturing HRK5.5bn 10-year bond. The Croatian finance ministry also sold €1.25bn worth of 10-year Eurobonds with an actual yield of 3.20% and a coupon rate of 3%.

In 2016, the ministry sold a combined HRK16.9bn worth of kuna T-bills and €1.62bn worth of euro-denominated securities on the domestic market. Croatia needed HRK27bn in 2016 just to refinance maturing bonds and cover the budget deficit, excluding the treasury bills. In 2017, it will need HRK30bn to refinance bonds and pay accrued interest.

Croatian Finance Ministry's T-bill Auctions
  91-day (HRK thousand)     182-day (HRK thousand)     364-day (HRK thousand)     91-day (EUR thousand)     364-day (EUR,000)     455-day (EUR,000)    
  Issue Bids Yield Issue Bids Yield Issue Bids Yield Issue Bids Yield Issue Bids Yield Issue Bids Yield
2016 Total 15,000 15,000 - 36,000 41,000 - 16,797,000 25,248,000 - 11,000 12,500 - 104,600 150,600 - 1,500,000 1,647,226 -
03/01/17 50,000 250,000 0.20% 50,000 50,000 0.28% 1,535,000 1,635,000 0.64%                  
24/01/17             928,000 1,128,000 0.60%                  
31/01/17             800,000 980,000 0.59%                  
21/02/17             1,496,000 1,931,000 0.50%                  
28/02/17             1,500,000 2,697,000 0.50%                  
07/03/17             864,000 1,064,000 0.45%                  
14/03/17             300,000 460,000 0.45%                  
28/03/17             558,000 658,000 0.45%                  
25/04/17             876,000 976,000 0.45%                  
02/05/17             409,000 509,000 0.45%                  
23/05/17             400,000 682,000 0.45%       20,000 30,100 0.05%      
23/05/17             1,000,000 1,308,000 0.45%                  
2017 Total 50,000 250,000 - 50,000 50,000 - 10,666,000 14,028,000 - 0 0 - 20,000 30,100 - 0 0 -
Source: Ministry of Finance

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