Yield at Croatia’s 364-day kuna bill remains flat at 0.45% for ninth consecutive auction

Yield at Croatia’s 364-day kuna bill remains flat at 0.45% for ninth consecutive auction
The yield of Croatia's 364-day kuna bill has remained flat for nine consecutive auctions / bne intelliNews
By bne IntelliNews June 27, 2017

Croatia sold HRK646mn (€87mn) worth of kuna-denominated 364-day bills at an auction on June 27, according to a statement from the finance ministry. The finance ministry’s kuna bills offer was higher than the planned HRK550mn thanks to strong demand of HRK770mn as yields remained flat at a historic low of 0.45% for the ninth consecutive auction. 

So far, Croatia has raised a total of HRK12.1bn through kuna denominated and €20mn via euro denominated T-bills auctions this year. The finance ministry will redeem HRK562mn worth of bills later this week. The ministry plans to hold the next T-bill auction on August 22 to raise HRK1.15bn.

Following the auction held on June 27, the Adriatic country’s kuna denominated short-term (less than one-year) debt stock rose to HRK18.23bn while euro denominated short-term debt stock remained at €103.6mn.

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 are expected to continue.

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.

An unnamed source at a major local bank told Reuters on June 9 that Croatia was gearing up for a 15-year local bond issue worth up to €500mn that is expected soon with a cost of over 3%.

Croatia also needs to refinance a HRK4bn worth of domestic bond maturing in November 2017.

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. 

In March, 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%.

Croatian Finance Ministry's T-bill Issues
  91-day, HRKmn Yield 182-day, HRKmn Yield 364-day, HRKmn Yield 91-day, EURmn Yield 182-day, EURmn Yield 364-day, EURmn Yield
2016 Total 15 - 36 - 16,797 - 11 - 105 - 1,500 -
03/01/17 50 0.20% 50 0.28% 1,535 0.64%            
24/01/17         928 0.60%            
31/01/17         800 0.59%            
21/02/17         1,496 0.50%            
28/02/17         1,500 0.50%            
07/03/17         864 0.45%            
14/03/17         300 0.45%            
28/03/17         558 0.45%            
25/04/17         876 0.45%            
02/05/17         409 0.45%            
23/05/17         400 0.45%     20 0.05%    
30/05/17         1,000 0.45%            
06/06/17         643 0.45%            
27/06/17         646              
2017 Total 50 - 50 - 11,955 - 0 - 20 - 0 -

Source: Ministry of Finance

 

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