Croatia’s capital city took on debt through its umbrella firm Zagreb Holding. It took on the obligation to invest in green energy, water supply and waste management. Top officials in Zagreb said it is the first issuance of green municipal bonds in Central and Eastern Europe.
By selling a debt securities package, Zagreb Holding managed to cover EUR 305 million that it owed and was due to pay. The bonds entered the market through registration at the Zagreb Stock Exchange.
Investors subscribed for more than EUR 480 million in the process. The European Bank for Reconstruction and Development and the World Bank’s International Finance Corp. bought 47.5% of the sum while the share of domestic commercial banks came in at 34%, the Croatian capital city’s umbrella company said.
Mayor Tomašević: International financial institutions only endorse sustainable way of doing business
“The bond issue concerned also represents the biggest investment of international financial institutions in a debt security in the domestic market. In addition, it is the first issuance of bonds linked to sustainable business activities of an issuer with municipal risk in the CEE region,” the announcement reads.
Zagreb holding agreed to invest in the production of renewable energy, reduction of losses in water supply and increasing the share of sorted waste.
Even though most business analysts expected a coupon interest rate of over 6%, we are exceptionally proud that it amounted to 4.9%, meaning that we achieved an interest rate which is the lowest possible,” Mayor Tomislav Tomašević stated. He underscored that international financing institutions only endorse sustainable way of doing business.
Zagreb Holding said it expects to reduce the amount of landfilled waste by 132,000 tons and increase the share of renewable energy consumption to 70% from 50% by 2028, when the green bonds are due.
Last year M+ Group became the first company in Croatia to issue sustainability-linked bonds.