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The European Bank for Reconstruction and Development (EBRD) Business Forum and Annual Assembly held on Friday and Saturday in London, were a great opportunity for our Government delegation to warm up to this week’s road show on the eve of the Eurobond issuance.

The government delegation in London, led by Minister Ivan Šuker, spoke to representatives of two development banks, EBRD and the European Investment Bank, and is flying today to Vienna, beginning their investor road show. The road show will end in London, after visits to Zurich, Frankfurt and Munich. Visits to Milan and Paris are also options. Although the Ministry of Finance is still cautious and estimate debts to 750 million euro, financial circles believe that the state will manage to earn approximately 1 billion Euro through the bond issue. The solvency status of international banks is also far better than in the last couple of months; in the last 2-3 months alone the risk premiums have been significantly reduced. Still, things are not all that simple. In Croatia, the reliability of the risk indicators is diminished, since Croatia has not tested the international market for five years. According to the most frequent indicator, the CDS spread, Croatia’s risk premium was three times higher only three months ago (in case of a five year maturity it fell from 6 to somewhat over 2%.) This does not mean that the investors will be satisfied with a yield of 5% – 5.5%, which would account for the combined reference yields and premium risk indicators. More funds would mean higher premiums. Analysts believe that the price of a 5-year loan could be approximately 6%.