Croatia issued €750mn through a Eurobond maturing in 2028 at a yield of 2.898% and bearing a coupon rate of 2.700%, the government announced on June 7.

Improving macroeconomic performance and restored political stability have been supporting the outlook for the Adriatic country’s borrowing performance. Both Fitch and Standard & Poors have raised Croatia’s ratings this year.

“Very strong investor interest and successful issuance conditions are the result of positive economic trends for Croatia, as well as implemented fiscal consolidation, reduction of public debt and realised surplus in the general government budget and improved credit rating of the country,” the finance ministry said in a statement.

The funds raised through the issue will be used to refinance existing Eurobonds maturing in July this year, amounting to €750mn with a coupon rate of 5.875%. This will result in significant savings in terms of interest expense, amounting to around HRK179mn per year.

The demand for Croatian Eurovons was high at €3.5bn, 4.7 times higher than the issue, and came from CEE countries, the US, the UK, Germany, Austria, France and Benelux countries.

“In relatively challenging market  conditions the price guidance has been surprisingly lowered from the initial +220bp over Midswaps to +205bp area, which put new issue relatively tight  aagainst the outstanding EUR Eurobond curve of Croatia,” Raiffeisen Research said in a note.

"The improvement in macro performance and strong fiscal policy enabling account consolidation and debt reduction make it possible for Croatia to win another round of rating upgrades which would bring the country back into investment grade. On the other hand Croatia Eurobonds’ valuations remain relatively tight even after the last market correction, so we have a Hold recommendation for these,” Raiffeisen analysts added.

Croatia last tapped the international markets in November last year, when the sovereign issued €1.275bn through a Eurobond maturing in 2030 at a yield of 2.953% and bearing a coupon rate of 2.75%.