Obligation Croatica 6.25% ( XS0776179656 ) en USD

Société émettrice Croatica
Prix sur le marché 100 %  ▼ 
Pays  Croatie
Code ISIN  XS0776179656 ( en USD )
Coupon 6.25% par an ( paiement semestriel )
Echéance 27/04/2017 - Obligation échue



Prospectus brochure de l'obligation Croatia XS0776179656 en USD 6.25%, échue


Montant Minimal 200 000 USD
Montant de l'émission 1 500 000 000 USD
Description détaillée La Croatie est un pays d'Europe du Sud-Est, membre de l'Union européenne, bordé par la mer Adriatique, connu pour ses paysages côtiers pittoresques, ses îles, son riche patrimoine historique et culturel, et sa gastronomie méditerranéenne.

L'analyse détaillée de l'obligation souveraine au code ISIN XS0776179656 met en lumière un instrument de dette émis par la Croatie, un État souverain situé au carrefour de l'Europe centrale et du Sud-Est, membre de l'Union européenne, qui recourt régulièrement aux marchés financiers internationaux pour le financement de ses dépenses publiques et la gestion de sa dette nationale. Cette émission spécifique, libellée en dollars américains (USD), offrait un taux d'intérêt annuel nominal de 6,25%, versé semi-annuellement (deux fois par an), et représentait une taille totale d'émission substantielle de 1 500 000 000 USD, avec une taille minimale à l'achat fixée à 200 000 USD, indiquant une cible d'investisseurs institutionnels ou des entités ayant des capacités d'investissement significatives. Ayant atteint sa date d'échéance le 27 avril 2017, cette obligation a été intégralement remboursée à sa valeur nominale de 100% sur le marché, confirmant le respect par l'émetteur de ses engagements financiers et renforçant la perception de sa crédibilité sur les marchés de capitaux mondiaux.







REPUBLIC OF CROATIA
U.S.$1,500,000,000 6.250 PER CENT. NOTES DUE 2017
Issue price: 99.472 per cent.
The U.S.$1,500,000,000 6.250 per cent. Notes due 2017 (the "Notes") are issued by the Republic of Croatia (the "Issuer" or "Republic" or
"Croatia").
The Notes mature on 27 April 2017.
Application has been made to the Commission de Surveillance du Secteur Financier (the "CSSF") in its capacity as competent authority under the
Luxembourg Act dated 10 July 2005 (the "Luxembourg Act") on prospectuses for securities to approve this document as a prospectus. The CSSF
assumes no responsibility as to the economic and financial soundness of the transaction or the quality or solvency of the Issuer in accordance with
Article 7(7) of the Prospectus Act 2005. Application has also been made to the Luxembourg Stock Exchange for the listing of the Notes on the
Official List of the Luxembourg Stock Exchange and admission to trading on the Luxembourg Stock Exchange's regulated market.
The Issuer is, and the Notes are expected to be, rated Baa3 (stable outlook) by Moody's Investors Service, Ltd., BBB- (negative outlook) by
Standard & Poor's Credit Market Services Europe Ltd., and BBB- (negative outlook) by Fitch Ratings Ltd. A rating is not a recommendation to buy,
sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. As at the date of this
Prospectus, each of the rating agencies is established in the European Union and is registered under Regulation (EU) No 1060/2009 (as amended)
(the "CRA Regulation"). As such, each of the rating agencies is included in the list of credit rating agencies published by the European Securities
and Markets Authority ("ESMA") on its website in accordance with such Regulation. In general, European regulated investors are restricted under
the CRA Regulation from using credit ratings for regulatory purposes, unless such ratings are issued by a credit rating agency established in the EU
and registered under the CRA Regulation (and such registration has not been withdrawn or suspended), subject to transitional provisions that apply in
certain circumstances whilst the registration application is pending. Such general restriction will also apply in the case of credit ratings issued by non-
EU credit rating agencies, unless the relevant credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating
agency is certified in accordance with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn
or suspended). The list of registered and certified rating agencies published by ESMA on its website in accordance with the CRA Regulation is not
conclusive evidence of the status of the relevant rating agency included in such list, as there may be delays between certain supervisory measures
being taken against a relevant rating agency and the publication of the updated ESMA list. Certain information with respect to the credit rating
agencies and ratings is set out in the sections entitled "Credit Ratings", "There can be no assurance that Croatia's credit rating will not change" and
"Credit Ratings may not reflect all risks" of this Prospectus.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or
with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered
within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. Accordingly, the Notes are being offered, sold or delivered: (a) in the United States
only to qualified institutional buyers ("QIBs") (as defined in Rule 144A ("Rule 144A") under the Securities Act) in reliance on, and in
compliance with, Rule 144A; and (b) outside the United States in reliance on Regulation S ("Regulation S") under the Securities Act.
Each purchaser of the Notes will be deemed to have made the representations described in "Subscription and Sale" and is hereby notified
that the offer and sale of Notes to it, if in the United States, is being made in reliance on the exemption from the registration requirements
of the Securities Act provided by Rule 144A. In addition, until 40 days after the commencement of the offering, an offer or sale of any of
the Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements
of the Securities Act if the offer or sale is made otherwise than in accordance with Rule 144A.
The Notes will initially be represented by two global certificates in registered form (the "Global Certificates"), one of which will be issued in
respect of the Notes offered and sold in reliance on Rule 144A (the "Restricted Global Certificate") and will be registered in the name of
Cede & Co., as nominee for The Depository Trust Company ("DTC") and the other of which will be issued in respect of the Notes offered and
sold in reliance on Regulation S (the "Unrestricted Global Certificate") and will be registered in the name of a nominee of a common
depositary for Euroclear Bank S.A./N.V. ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg"). It is
expected that delivery of the Global Certificates will be made on 27 April 2012 or such later date as may be agreed (the "Closing Date") by the
Republic and the Joint Lead Managers (as defined under "Subscription and Sale").
Prospective investors should be aware that none of the statistical information in this Prospectus has been independently verified.
An investment in the Notes involves certain risks.
Prospective investors should have regard to the factors described under the heading
"Risk Factors" on page 6.
Joint Lead Managers
CITIGROUP
DEUTSCHE BANK
J.P. MORGAN
The date of this Prospectus is 26 April 2012.


THE REPUBLIC OF CROATIA
i


This Prospectus comprises a prospectus for the purposes of Article 5.3 of Directive 2003/71/EC (the "Prospectus
Directive") and for the purposes of the Luxembourg Act.
The Republic accepts responsibility for the information contained in this Prospectus. To the best of the knowledge
of the Republic (having taken all reasonable care to ensure that such is the case) the information contained in this
Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Republic, having made all reasonable enquiries, confirms that this Prospectus contains all material information
with respect to the Republic and the Notes which is material in the context of the issue and offering of the Notes, that
the information contained in this Prospectus is true and accurate in every material respect and is not misleading, that
the opinions and intentions expressed in this Prospectus are honestly held and that there are no other facts the
omission of which makes misleading any statement herein, whether of fact or opinion.
The Joint Lead Managers (as described under "Subscription and Sale" below) have not independently verified the
information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made
and no responsibility or liability is accepted by the Joint Lead Managers as to the accuracy or completeness of the
information contained or incorporated in this Prospectus or any other information provided by the Republic in
connection with the offering of the Notes. No Joint Lead Manager accepts any liability in relation to the information
contained or incorporated by reference in this Prospectus or any other information provided by the Republic in
connection with the offering of the Notes or their distribution.
No person is or has been authorised by the Republic to give any information or to make any representation not
contained in or not consistent with this Prospectus or any other information supplied in connection with the offering
of the Notes and, if given or made, such information or representation must not be relied upon as having been
authorised by the Republic or any of the Joint Lead Managers.
Neither this Prospectus nor any other information supplied in connection with the offering of the Notes (a) is
intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by
the Republic or any of the Joint Lead Managers that any recipient of this Prospectus or any other information
supplied in connection with the offering of the Notes should purchase the Notes. Each investor contemplating
purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its
own appraisal of the creditworthiness, of the Republic. Neither this Prospectus nor any other information supplied
in connection with the offering of the Notes constitutes an offer or invitation by or on behalf of the Republic or any
of the Joint Lead Managers to any person to subscribe for or to purchase any Notes.
Neither the delivery of this Prospectus nor the offering, sale or delivery of the Notes shall in any circumstances
imply that the information contained herein concerning the Republic is correct at any time subsequent to the date
hereof or that any other information supplied in connection with the offering of the Notes is correct as of any time
subsequent to the date indicated in the document containing the same. The Joint Lead Managers expressly do not
undertake to review the financial condition or affairs of the Republic during the life of the Notes or to advise any
investor in the Notes of any information coming to their attention.
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy the Notes in any jurisdiction
to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this
Prospectus and the offer or sale of Notes may be restricted by law in certain jurisdictions. The Republic and the Joint
Lead Managers do not represent that this Prospectus may be lawfully distributed, or that the Notes may be lawfully
offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to
an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In
particular, no action has been taken by the Republic or the Joint Lead Managers which is intended to permit a public
offering of the Notes or the distribution of this Prospectus in any jurisdiction where action for that purpose is
required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Prospectus nor any
advertisement or other offering material may be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with any applicable laws and regulations. Persons into whose
possession this Prospectus or any Notes may come must inform themselves about, and observe, any such
restrictions on the distribution of this Prospectus and the offering and sale of Notes. In particular, there are
restrictions on the distribution of this Prospectus and the offer or sale of the Notes in the United States, the European
Economic Area (including the United Kingdom) and the Republic of Croatia, see "Subscription and Sale".
IN CONNECTION WITH THE ISSUE OF THE NOTES, DEUTSCHE BANK AG, LONDON BRANCH AS
STABILISING MANAGER (THE "STABILISING MANAGER") (OR PERSON(S) ACTING ON BEHALF
OF THE STABILISING MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS
WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER
THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE
ii


THAT THE STABILISING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISING
MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY
BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS
OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT
MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE CLOSING DATE OF THE
NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE NOTES. ANY
STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE RELEVANT
STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF ANY STABILISING
MANAGER(S)) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.
The Notes have not been approved or disapproved by the United States Securities and Exchange Commission or any
other securities commission or other regulatory authority in the United States, nor have the foregoing authorities
reviewed or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a
criminal offence.
This Prospectus is being submitted on a confidential basis in the United States to a limited number of QIBs for
informational use solely in connection with the consideration of the purchase of the Notes. It may not be copied or
reproduced in whole or in part nor may it be distributed or any of its contents disclosed to anyone other than the
prospective investors to whom it is originally submitted.
Each purchaser or holder of interests in the Notes will be deemed, by its acceptance or purchase of any such Notes,
to have made certain representations and agreements as set out in "Subscription and Sale".
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS
BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE
STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A
PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE
SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B
IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT
THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF,
OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS
UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER
OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES
The Republic is a foreign sovereign nation, and a substantial portion of the assets of the Republic are located outside
the United States and the United Kingdom. As a result, it may not be possible for investors to effect service of
process within the United States or the United Kingdom upon the Republic, or to enforce judgements obtained in
courts located in the United States or United Kingdom, including judgements predicated upon civil liability
provisions of the securities laws of the United States or any state or territory within the United States.
A substantial part of the Republic's assets are located in the Republic of Croatia and the courts of the Republic of
Croatia may refuse to recognise a judgement obtained in a foreign jurisdiction (including, but not limited to England
and the United States) in certain cases according to the provisions of the Croatian Law on Resolving Conflicts of
Law with Other Countries' Laws and Regulations in Certain Matters (OG 53/1991). Once recognised, a foreign
judgement is equal to the judgment of a Croatian court and is fit for enforcement in the Republic of Croatia.
iii


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Prospectus, as well as written and oral statements that Republic and its
representatives make from time to time in reports, filings, news releases, conferences, teleconferences, web
postings or otherwise, are or may be deemed to be forward-looking statements. Statements that are not historical
facts, including, without limitation, statements about the Republic's beliefs and expectations, are forward-looking
statements. These statements are based on current plans, objectives, assumptions, estimates and projections. When
used in this Prospectus, the words "anticipates", "estimates", "expects", "believes", "intends", "plans", "aims",
"seeks", "may", "will", "should" and any similar expressions generally identify forward-looking statements.
Therefore, undue reliance should not be placed on them. The Republic has based these forward-looking statements
on its current view with respect to future events and financial results. Forward-looking statements speak only as of
the date on which they are made and the Republic undertakes no obligation to update publicly any of them in light of
new information or future events. Forward-looking statements involve inherent risks and uncertainties. The
Republic cautions that a number of important factors could cause actual results to differ materially from those
contained in any forward-looking statement. Forward-looking statements include, but are not limited to: (i) plans
with respect to the implementation of economic policy, including privatisations, and the pace of economic and legal
reforms; (ii) expectations about the behaviour of the economy if certain economic policies are implemented;
(iii) the outlook for gross domestic product, inflation, exchange rates, interest rates, foreign investment, trade and
fiscal accounts; and (iv) estimates of external debt repayment and debt service.
In addition to the factors described in this Prospectus, including those discussed under the "Risk Factors", the
following factors, among others, could cause future results to differ materially from those expressed in any forward-
looking statements made herein:
· adverse external factors, such as global or regional economic slowdowns that may affect the Republic, higher
international interest rates, reduced demand for the Republic's exports or increases in oil and gas prices, which
could each adversely affect the Republic's economy and in particular could negatively affect the current account,
balance of payments and international reserves and cause or contribute to recession or low growth in the Republic;
· adverse domestic factors, such as recession, declines in foreign direct investment ("FDI") and portfolio
investment, high domestic inflation, high domestic interest rates, exchange rate volatility, a reduction in gas
supplies, difficulties in borrowing in the domestic and foreign markets, trade and political disputes between the
Republic and its trading partners, political uncertainty or lack of political consensus, which could each lead to
lower growth in the Republic and lower international currency reserves;
· decisions of the Republic's official creditors regarding the provision of new debt or rescheduling of the existing
debt and decisions of international organisations regarding the terms of their financial assistance to the Republic,
and accordingly the net cash flow to or from the Republic over the life of the Notes;
· decisions of international financial institutions such as the International Monetary Fund (the "IMF"), the World
Bank, the European Bank for Reconstruction and Development (the "EBRD") and the European Investment
Bank (the "EIB") regarding the funding of new or existing projects over the life of the Notes; and
· political and economic factors in the Republic and abroad, which affect the timing and structure of economic
reforms in the Republic, the success and timing of the Republic's accession to the European Union ("EU"), the
climate for FDI and the pace, scale and timing of privatisations in the Republic.
iv


DEFINED TERMS AND CONVENTIONS
The following terms are used to refer to economic concepts that are discussed in this Prospectus:
· Gross domestic product ("GDP") means the total value of goods and services produced inside a country during
the relevant period. Unless otherwise stated references to GDP is to real, rather than nominal, GDP.
· Gross value added ("GVA") is the value of output less the value of intermediate consumption; it is a measure of
the contribution to GDP made by an individual producer, industry or sector and is used to estimate GDP. GVA
(measured by sector) plus taxes minus subsidies equals GDP.
· Imports comprise all goods and services imported from abroad intended either for consumption or for inward
processing. Exports comprise all goods and services exported from Croatia, which originate from domestic
production or internal trade.
· The registered unemployment rate is calculated as the ratio of the members of the active population who register
with local employment agencies as being unemployed to the total active population. "Active Population" means
people employed and people over the age of 15 registered as seeking employment.
· The inflation rate is measured by the year-on-year percentage change in the consumer price index ("CPI"), unless
otherwise specified. The CPI index, measures inflation based on the price of a basket of approximately 740 goods
and services weighted according to the Household Budget Survey and retail sales data. Croatia also measures
inflation in terms of producer price index ("PPI"), which is the measure of wholesale prices at the producer level
calculated based on a basket of approximately 400 industrial products. Unlike CPI, PPI does not take into account
services. Year-on-year rates are calculated by comparing the average of the twelve monthly indices for the later
period against the average of the twelve monthly indices for the prior period.
· The budget deficit is consolidated revenues minus consolidated expenditures of the general government. This is
the principal measure of fiscal balance for countries participating in the European Economic and Monetary
Union.
· The Standard International Trade Classification ("SITC") is a statistical classification of the commodities
entering external trade. It is designed to provide the commodity aggregates required for the purposes of economic
analysis and to facilitate the international comparison of trade-by-commodity data.
· General government debt ("general government debt") consists of the sum of: (i) central government debt;
(ii) extra budgetary debt (of government funds and agencies); and (iii) local government debt.
Capitalised terms which are used but not defined in any particular section of this Prospectus will have the meaning
attributed thereto in "Conditions of the Notes" or any other section of this Prospectus.
Certain figures and percentages included in this Prospectus have been subject to rounding adjustments; accordingly
figures shown in the same category presented in different tables may vary slightly and figures shown as totals in
certain tables may not be an arithmetic aggregation of the figures which precede them.
References to a "billion" are to a thousand million.
All references in this document to "U.S. dollars", "dollars", "U.S.$", "USD" and "$" refer to United States dollars,
to "CHF" refer to Swiss francs and to "HRK" and "Kuna" refer to the lawful currency for the time being of the
Republic. In addition, references to "euro", "EUR" and "E" refer to the currency introduced at the start of the third
stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union,
as amended. References to "Old EU Member States" refer to Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden and United Kingdom
whereas references to "New EU Member States" are to all other Member States of the European Union.
References to "OG" and "Official Gazette" are to "Narodne novine", the official newspaper of the Republic of
Croatia for the publication of acts, laws and other rules and regulations of the Croatian Parliament, the Croatian
Government, the Ministries and other regulatory bodies and of the President of the Republic of Croatia. Legislation
generally becomes effective eight days following publication in the Official Gazette.
Certain official data related to the year ended 31 December 2011 as well as all data relating to the period from
1 January 2012 to the present is preliminary and subject to change.
v


INFORMATION SOURCES
The statistical information in this Prospectus has been derived from a number of different identified sources. All
statistical information provided in this Prospectus may differ from that produced by other sources for a variety of
reasons, including the use of different definitions and cut-off times.
The source for most of the financial and demographic statistics for Croatia included in this Prospectus is data
prepared by the Republic's Central Bureau of Statistics ("CBS"), a Croatian independent entity established to
provide comprehensive statistical information, and the Croatian National Bank ("CNB"). The CBS harmonises, to
the extent possible, its programmes and methodologies with the statistics of the EU. Certain other financial and
statistical information contained herein has been derived from official Croatian government sources including the
Ministry of Finance.
EXCHANGE RATES
The following table sets forth, for the periods indicated, the period end, average, high and low official mid-point
rates published by the Croatian National Bank, expressed in Kuna per U.S. Dollar.
Period End
Average(1)
High
Low
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.233626
5.949959
6.315817
5.556868
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.578401
5.839170
6.233626
5.521655
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.985456
5.365993
5.711720
4.933413
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.155504
4.934417
5.801776
4.522752
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.089300
5.280370
5.941123
4.803825
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.568252
5.500015
6.088922
5.009663
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.819940
5.343508
5.825236
4.947426
January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.764975
5.846617
5.956276
5.751606
February 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.633652
5.733239
5.830141
5.633652
March 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.623580
5.709035
5.771751
5.623580
April 2012 (through to 10 April) . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.723806
5.660529
5.724063
5.615424
Source: Croatian National Bank
(1) Average of daily rates.
vi


CONTENTS
OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
THE GLOBAL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
OVERVIEW OF THE REPUBLIC OF CROATIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
THE ECONOMY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
FOREIGN TRADE AND INTERNATIONAL BALANCE OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . .
62
MONETARY DEVELOPMENTS AND INTERNATIONAL RESERVES . . . . . . . . . . . . . . . . . . . . . . . .
76
PUBLIC FINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101
PUBLIC DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123
CLEARING AND SETTLEMENT ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129
TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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OVERVIEW
This Overview does not purport to be complete and must be read as an introduction to this Prospectus and any
decision to invest in the Notes should be based on a consideration of this Prospectus as a whole.
Words and expressions defined in "Conditions of the Notes" shall have the same meanings in this Overview.
THE REPUBLIC OF CROATIA
Territory and Population
Croatia occupies a total area of 87,661 square kilometres, of which 56,594 square kilometres is land and
31,067 square kilometres is sea. The capital city, Zagreb, is located in the north of the country. The Dinaric Alps,
which rise to 1,831 metres above sea level, run the length of the country. Croatia borders Slovenia to the north and
Montenegro to the east and shares a sea border with Italy to the west and south. The Danube forms the eastern border
with Serbia while the other two large rivers, the Sava and Drava, form the southern and northern borders with Bosnia
Herzegovina and Hungary, respectively. The area of land between the rivers is dissected by many smaller tributaries.
The Adriatic coastline is the most prominent feature of Croatia, running the entire length of the western border, from
the Istrian peninsula in the north to Dubrovnik in the South with approximately 1,185 islands along the coast.
Constitution and Government Structure
Croatia's constitution was adopted on 22 December 1990 and was substantially amended in December 1997,
November 2000, April 2001 and June 2010 (the "Constitution"). It established a multi-party democracy, with an
economy based on market principles and private ownership. Under the Constitution, the President of Croatia (the
"President") is elected for five-year terms and may not serve more than two terms. The current President, Ivo
Josipovic´, was elected in February 2010. The President appoints, with the consent of the President of the Parliament,
a Prime Minister of the Government (the "Prime Minister") who, in turn, appoints Government Ministers. The
current Prime Minister is Zoran Milanovic´, appointed in December 2011. The Constitution is based on the
separation of powers between the legislature, executive and judiciary. The most recent parliamentary elections were
held on 4 December 2011.
Judicial Reform
In 2008, the Government commenced a reform of the judiciary (the "Judicial Reform") in order to combat
corruption and restore confidence in the judicial system. The Ministry of Justice is undertaking measures aimed at
establishing a more efficient judicial system founded upon principles of independence and professionalism. The
objectives of the Judicial Reform include strengthening the rule of law, improving the efficiency and effectiveness
of the judicial system, shortening the period of time between the commencement and conclusion of training, and
improving professionalism and ongoing training of the staff.
International Relations
After gaining independence, Croatia was admitted to the United Nations (the "UN") in May 1992. In the same year,
Croatia became a participant country in the Organisation for Security and Co-operation in Europe ("OSCE") and
became a member of the International Monetary Fund ("IMF"). In 1996, Croatia became the 40th Member State of
the Council of Europe. In October 2000, Croatia became a member of the World Trade Organisation ("WTO"),
while in 2002 it acceded to the Central European Free Trade Area. Furthermore, Croatia was elected as a non-
permanent member of the UN Security Council for the period 2008-2009, holding the Council's Presidency in
December 2008. In April 2009, Croatia acceded to the North Atlantic Treaty Organization ("NATO"). Croatia
became a candidate country for EU accession in June 2004 and the accession process is currently in its final phase,
as discussed below.
European Union Accession
In October 2005, the EU Council of Ministers formally opened Croatia's accession negotiations with the EU.
Following the adoption of the EU acquis communitaire into national law and the completion of negotiations,
Croatia signed the EU Accession Treaty (the "Accession Treaty") on 9 December 2011. Full EU membership is
expected on 1 July 2013. On 22 January 2012, EU accession was approved in a national referendum, with 66.27 per
cent. of those participating voting in favour and 33.13 per cent. voting against. Prior to accession, the EU will
continue to monitor Croatia's compliance with the acquis communitaire. In addition, the parliament of each EU
member state must ratify the Accession Treaty before it can come into effect. As of the date hereof, six EU member
states have ratified the Accession Treaty.
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Economy
One of the main objectives of Croatia's economic policy is to continue the process of narrowing the gap between its
GDP per capita and the EU average. According to Eurostat estimates, as at 31 December 2010 (the latest year for
which data is available), Croatia's per capita income was approximately 61 per cent. of the GDP per capita of the 27
EU member states in purchasing power terms.
The framework and goals of the economic policy of Croatia are defined in a series of strategic documents of the
Government, namely: the Strategic Development Framework for 2006-2013, the Government Programmes Strategy
2011-2013, the Economic and Fiscal Policy Guidelines and the Pre-accession Economic Programme (the "PEP").
Those documents provide the basis for the implementation of the economic policy in the medium term period, and
they are prepared through consultations between the Government administration bodies and employers' and unions'
representatives.
The main objective of the economic policy in the current macroeconomic environment is to preserve
macroeconomic stability and create conditions for recovery and stable economic growth.
GDP
The effects of the global financial and economic crisis were first felt in Croatia in the second half of 2008 and
intensified towards the end of the year. The negative impact of the crisis intensified further in 2009 and annual GDP
contracted by 6.0 per cent. in 2009. This trend continued in 2010, with annual GDP for 2010 contracting by 1.4 per
cent. According to preliminary estimates, in 2011 GDP recorded a growth rate of 0.0 per cent. in real terms,
year-on-year.
Gross Value Added
GVA in real terms declined by 4.1 per cent. in 2009 as compared to 2008 when it grew by 2.8 per cent. This decline
was largely attributable to the real GVA decrease in the wholesale and retail trade sector and the mining, quarrying,
manufacturing, electricity, gas and water supply sectors. The GVA dynamics and trends in 2009 and 2010 were
primarily due to the negative effects of the global financial and economic crisis. In 2010, GVA declined by 1.7 per
cent. compared to a decline of 4.1 for 2009. This decrease was mainly due to real GVA decreases in the construction
(16.4 per cent.) and transport, storage and communication (2.4 per cent.) sectors. 2011 saw a real stagnation in GVA
i.e. a real growth rate of 0.0 per cent., year-on-year. Nominal GVA increased from HRK 288,356 million in 2010 to
HRK 295,165 million in 2011. The real stagnation was mainly the result of a real increase in GVA in hotels and
restaurants (4.4 per cent.), and a real decrease of GVA recorded in construction (9.3 per cent.).
Inflation
Price stability has consistently been the primary goal of the Croatian National Bank's (the "CNB") monetary policy,
which the CNB pursues primarily through the maintenance of the relatively stable HRK/EUR exchange rate. The
average annual rate of inflation as measured by the consumer price index ("CPI") increased from 2.9 per cent. in
2007 to 6.1 per cent. in 2008. Declines in inflation, which commenced in the second half of 2008, continued
throughout 2009. The average annual inflation rate for the years ended 2009, 2010 and 2011 was 2.4 per cent.,
1.1 per cent. and 2.3 per cent., respectively. Several factors contributed to downward pressures on prices, including
weakened domestic demand for goods and services, reduced inflation pressures stemming from prices of imports
and slower growth of unit labour costs. These downward pressures were to some extent offset by the growth in
prices of subsidised products, such as gas, tobacco products, and medical and hospital services as well as increases
in food and commodities prices and energy prices (gas and refined petroleum product prices).
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