Bond Croatica 6.5% ( XS0431967230 ) in EUR

Issuer Croatica
Market price 100 %  ▼ 
Country  Croatia
ISIN code  XS0431967230 ( in EUR )
Interest rate 6.5% per year ( payment 1 time a year)
Maturity 05/01/2015 - Bond has expired



Prospectus brochure of the bond Croatia XS0431967230 in EUR 6.5%, expired


Minimal amount 50 000 EUR
Total amount 750 000 000 EUR
Detailed description Croatia boasts a stunning coastline dotted with islands, historic towns, and national parks, offering a diverse blend of natural beauty and cultural heritage.

The Bond issued by Croatica ( Croatia ) , in EUR, with the ISIN code XS0431967230, pays a coupon of 6.5% per year.
The coupons are paid 1 time per year and the Bond maturity is 05/01/2015







PROSPECTUS
Republic of Croatia
e750,000,000
6.50 per cent. Notes due 5 January 2015
Issue price: 99.675 per cent.
The issue price of the c750,000,000 6.50 per cent. Fixed Rate Notes due 5 January 2015 (the
Notes) issued by the Republic of Croatia (the Issuer, the Republic or Croatia), will be 99.675
per cent. of their principal amount. The Notes will mature on 5 January 2015 at their principal
amount.
The Notes will be in bearer form in denominations of c50,000 and integral multiples of c1,000 in
excess thereof up to and including c99,000. No Notes in definitive form will be issued with a
denomination above c99,000. Interest on the Notes will accrue at the rate of 6.50 per cent. per
annum from and including 5 June 2009 2009 and will be payable in Euro annually in arrear on 5
January in each year, commencing 5 January 2010. Payments on the Notes will be made
without withholding or deduction for or on account of taxes imposed by the Issuer except to the
extent described under Terms and Conditions of the Notes ­ Taxation''.
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 and
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 Notes have not been and will not be registered under the United States Securities Act of
1933, as amended (the Securities Act), or any state securities law, and may not be offered or
sold within the United States or to, or for the account or benefit of, any U.S. person except
pursuant to an exemption from, or in a transaction not subject to, the registration requirements
of the Securities Act.
The Notes will initially be represented by a temporary global Note (the Temporary Global
Note), without interest coupons, which will be deposited with a common depositary for
Clearstream Banking, socie´te´ anonyme (Clearstream, Luxembourg) and Euroclear Bank S.A./
N.V. (Euroclear), on or about 5 June 2009 (the Closing Date). The Temporary Global Note will
be exchangeable for interests in a permanent global Note (the Permanent Global Note) on or
after a date which is expected to be 15 July 2009 (the Exchange Date) upon certification as to
non-U.S. beneficial ownership. The Permanent Global Note will be exchangeable for definitive
Notes only in certain limited circumstances as described herein. See ``Summary of Provisions
relating to the Notes while in Global Form''.
An investment in the Notes involves certain risks. See ``Risk Factors'' for a discussion of
certain factors that should be considered in connection with an investment in the Notes.
Joint Lead Managers
BNP PARIBAS
DEUTSCHE BANK
ZAGREBACKA BANKA D.D.
Co-Managers
RAIFFEISEN ZENTRALBANK
ERSTE GROUP BANK AG
O
¨ STERREICH AKTIENGELLSCHAFT
3 June 2009


THE REPUBLIC OF CROATIA
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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 Issuer accepts responsibility for the information contained in this Prospectus. To the best
of the knowledge of the Issuer (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 Issuer, having made all reasonable enquiries, confirms that this Prospectus contains all
information with respect to the Issuer 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.
No person has been authorised in connection with the offering of the Notes to give any
information or make any representation regarding the Issuer or the Notes other than as contained
in this Prospectus. Any such representation or information should not be relied upon as having
been authorised by the Issuer or any agency thereof or the Managers (as defined under
``Subscription and Sale''). Neither the delivery of this Prospectus nor any sales made in connection
with the issue of the Notes shall, under any circumstances, constitute a representation that there
has been no change in the affairs of the Issuer since the date hereof.
The Managers make no representation or warranty, express or implied, as to the accuracy or
completeness of the information in this Prospectus. Each person receiving this Prospectus
acknowledges that such person has not relied on any Manager or any person affiliated with any
Manager in connection with its investigation of the accuracy of such information or its investment
decision. Each person contemplating making an investment in the Notes must make its own
investigation and analysis of the creditworthiness of the Issuer and its own determination of the
suitability of any such investment, with particular reference to its own investment objectives and
experience, and any other factors which may be relevant to it in connection with such investment.
This Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer
or any agency thereof or any Manager to subscribe or purchase, any of the Notes. The distribution
of this Prospectus and the offering of the Notes in certain jurisdictions may be restricted by law.
Persons into whose possession this Prospectus comes are required by the Managers to inform
themselves about and to observe any such restrictions. For a description of certain further
restrictions on offers and sales of Notes and distribution of this Prospectus, see ``Subscription and
Sale''.
In this Prospectus, all references to HRK and Kuna are to the lawful currency for the time
being of the Issuer, all references to h, EUR, euro and Euro are to the currency introduced at the
start of the third stage of European Economic and Monetary Union pursuant to the Treaty
establishing the European Community, and all references to U.S. dollars, US$ and USD are to
the lawful currency for the time being of the United States of America. On 28 May 2009 the
Croatian National Bank middle exchange rate between the Euro and the Kuna was c1.00 =
HRK7.34 and the exchange rate between U.S. dollars and the Kuna was US$1.00 = HRK5.26.
Certain amounts which appear in this Prospectus have been subject to rounding adjustments;
accordingly, figures shown as totals may not be an arithmetic aggregation of the figures which
precede them.
IN CONNECTION WITH THE ISSUE OF THE NOTES, DEUTSCHE BANK AG, LONDON
BRANCH AS STABILISING MANAGER (THE STABILISING MANAGER) (OR PERSONS 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 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 ISSUE 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 STABILISING MANAGER (OR PERSONS ACTING ON
BEHALF OF THE STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS
AND RULES.
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TABLE OF CONTENTS
Risk Factors................................................................................................................................
5
Terms and Conditions of the Notes ...........................................................................................
9
Use of Proceeds.........................................................................................................................
18
Summary of Provisions relating to the Notes while in Global Form ..........................................
19
Overview of the Republic of Croatia ..........................................................................................
21
The Economy .............................................................................................................................
27
Foreign Trade and International Balance of Payments ...............................................................
38
Monetary Developments and International Reserves ................................................................
45
Public Finance ............................................................................................................................
59
Public Debt .................................................................................................................................
68
Taxation ......................................................................................................................................
77
Subscription and Sale .................................................................................................................
78
General Information....................................................................................................................
79
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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations
under the Notes. Most of these factors are contingencies which may or may not occur and the
Issuer is not in a position to express a view on the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks
associated with the Notes are described below.
The Issuer believes that the factors described below represent the principal risks inherent in
investing in the Notes, but the inability of the Issuer to pay interest, principal or other amounts on
or in connection with the Notes may occur for other reasons which may not be considered
significant risks by the Issuer based on information currently available to it or which it may not
currently be able to anticipate. Prospective investors should also read the detailed information set
out elsewhere in this Prospectus and reach their own views prior to making any investment
decision.
FACTORS THAT MAY AFFECT THE ISSUER'S ABILITY TO FULFIL ITS OBLIGATIONS UNDER THE
NOTES
General
Since gaining its independence in 1992, Croatia's political, legal, judicial and regulatory
structures have undergone extensive changes as part of the process of joining the North Atlantic
Treaty Organisation (NATO) and with a view to Croatia joining the European Union (the EU). To
the extent that such structures have been changed, they have not been fully tested. As a
consequence, investment in Croatia may carry risks that are not typically associated with investing
in more mature markets.
Political Considerations
Since 1993, Croatia has been pursuing a programme of economic structural reform which has
resulted in the establishment of a free market economy through privatisation of state enterprises
and deregulation of the economy. Croatia's stable political scene has been facilitated by the EU
and the commencement of EU accession negotiations, which commenced in November 2005. In
April 2009, Croatia officially became a member of NATO and the government has reaffirmed its
intention to continue the strategy in favour of a pro-European, mainstream conservative orientation
that is committed to democracy, the rule of law, human rights and minority rights. Although this
stability is expected to continue as EU commitments encourage the development of stronger
national institutions and as Croatia intends to place emphasis on harmonising its activities with the
acquis communautaire of the EU, there can be no assurance that the target date for EU accession
will be met. The accession of the Republic of Croatia to the EU depends on the successful
conclusion of ongoing negotiations with the relevant EU bodies and on the level of Croatia's
harmonisation with the acquis communautaire. The implementation of the acquis communautaire in
Croatia may have a significant impact on, inter alia, the Croatian legal and economic systems.
Economic Infrastructure
Croatia has made the transition to a functioning market economy but the rebuilding of
Croatia's infrastructure to a Western European standard requires further investment and may take
some years to complete.
General Economic
Due to the global economic slowdown the economic performance of Croatia has been
influenced resulting in the decline of GDP and tax revenues, leading to a rise in the budget deficit.
This, combined with a potential drop in revenue from tourism, an increase in unemployment and a
decrease in foreign direct investment, could lead to additional fiscal adjustments being needed.
In addition the current global economic environment is not favourable towards the
government's objective to privatise the shipbuilding industry in Croatia.
Official Economic Data
The Croatian Central Bureau of Statistics (the CBS), the Ministry of Finance and the Croatian
National Bank (the CNB) regularly publish statistics on Croatia and its economy. There can be no
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assurance that the statistics are as accurate as those compiled by statistics bureaus in developed
countries, but in recent years major adjustments have been made in line with international
methodologies. As a member of the International Monetary Fund (the IMF), Croatia is also a
subscriber to the Special Data Dissemination Standard established by the IMF. Although
subscription is voluntary, it carries a commitment by a subscribing member to observe the
standard and to provide certain information to the IMF about its practices in disseminating
economic and financial data.
Croatia's Legal System
Croatia has taken, and continues to take, steps to move towards a mature legal system
which is comparable to the legal systems of the EU countries. New laws have been introduced
and revisions have been made with respect to, amongst others, company, property, competition,
securities, labour and taxation laws in order to harmonise them with EU laws. Such new laws and
revisions remain untested in the courts and do not have a long history of interpretation. In some
circumstances, therefore, it may not be possible to obtain swift enforcements of judgments in
Croatia or predict the outcome of legal proceedings subject to these new laws.
The Notes are governed by English law and the Issuer has submitted to the non-exclusive
jurisdiction of the courts of England to settle any disputes that may arise out of or in connection
with any Note. In respect of any obligatory proceedings between the Issuer and a Croatian or non-
Croatian natural or legal person, a Croatian court will recognise and give effect to the choice of
English law as the law governing the Notes if the proceedings in question have an international
element. In respect of recognition and/or enforcement of an English/foreign court judgement,
Croatian courts may refuse to recognise such judgements only 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 (Official Gazette No. 51/1991). Once recognised, the foreign
judgement is equal to the judgment of a Croatian court and is fit for enforcement.
FACTORS WHICH ARE MATERIAL FOR THE PURPOSE OF ASSESSING THE MARKET RISKS
ASSOCIATED WITH THE NOTES
The Notes may not be a suitable investment for all investors
Each potential investor in the Notes must determine the suitability of that investment in light
of its own circumstances. In particular, each potential investor should:
(i)
have sufficient knowledge and experience to make a meaningful evaluation of the
Notes, the merits and risks of investing in the Notes and the information contained in
this Prospectus or any applicable supplement;
(ii)
have access to, and knowledge of, appropriate analytical tools to evaluate, in the
context of its particular financial situation, an investment in the Notes and the impact
the Notes will have on its overall investment portfolio;
(iii)
have sufficient financial resources and liquidity to bear all of the risks of an investment
in the Notes, including where the currency for principal or interest payments is different
from the potential investor's currency;
(iv)
understand thoroughly the terms of the Notes and be familiar with the behaviour of any
relevant financial markets; and
(v)
be able to evaluate (either alone or with the help of a financial adviser) possible
scenarios for economic, interest rate and other factors that may affect its investment
and its ability to bear the applicable risks.
Risks related to the Notes generally
Set out below is a brief description of certain risks relating to the Notes generally:
Modification
The conditions of the Notes contain provisions for calling meetings of Noteholders to
consider matters affecting their interests generally. These provisions permit defined majorities to
bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting
and Noteholders who voted in a manner contrary to the majority.
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EU Savings Directive
Under EC Council Directive 2003/48/EC on the taxation of savings income, Member States
are required to provide to the tax authorities of another Member State details of payments of
interest (or similar income) paid by a person within its jurisdiction to an individual resident in that
other Member State. However, for a transitional period, Belgium, Luxembourg and Austria are
instead required (unless during that period they elect otherwise) to operate a withholding system
in relation to such payments (the ending of such transitional period being dependent upon the
conclusion of certain other agreements relating to information exchange with certain other
countries). A number of non-EU countries and territories including Switzerland have adopted similar
measures (a withholding system in the case of Switzerland).
On 15 September 2008 the European Commission issued a report to the Council of the
European Union on the operation of the Directive, which included the Commission's advice on the
need for changes to the Directive. On 13 November 2008 the European Commission published a
more detailed proposal for amendments to the Directive, which included a number of suggested
changes. If any of those proposed changes are made in relation to the Directive, they may amend
or broaden the scope of the requirements described above.
If a payment were to be made or collected through a Member State which has opted for a
withholding system and an amount of, or in respect of, tax were to be withheld from that
payment, neither the Issuer nor any Agent nor any other person would be obliged to pay
additional amounts with respect to any Note as a result of the imposition of such withholding tax.
The Issuer is required to maintain an Agent in a Member State that is not obliged to withhold or
deduct tax pursuant to the Directive.
Change of law
The conditions of the Notes are based on English law in effect as at the date of this
Prospectus. No assurance can be given as to the impact of any possible judicial decision or
change to English law or administrative practice after the date of this Prospectus.
Denominations involve integral multiples: definitive Notes
The Notes have denominations consisting of a minimum of c50,000 plus integral multiples of
c1,000 in excess thereof up to and including c99,000. It is possible that the Notes may be traded
in amounts that are not integral multiples of c50,000. In such a case a holder who, as a result of
trading such amounts, holds an amount which is less than c50,000 in his account with the
relevant clearing system at the relevant time may not receive a definitive Note in respect of such
holding (should definitive Notes be printed) and would need to purchase a principal amount of
Notes such that its holding amounts to at least c50,000.
If definitive Notes are issued, holders should be aware that definitive Notes which have a
denomination that is not an integral multiple of c50,000 or its equivalent may be illiquid and
difficult to trade.
Croatian Investors
The Notes and Coupons (each as defined herein) are governed by English law and the Issuer
has submitted to the non-exclusive jurisdiction of the courts of England to settle any disputes that
may arise out of or in connection with any Note or Coupon (see ``Terms and Conditions of the
Notes ­ 15. Governing Law and Jurisdiction'' below). In respect of any proceedings between the
Issuer and a Croatian natural or legal person to which a non-Croatian natural or legal person is not
also a party, a Croatian court may refuse to recognise and give effect to the choice of English law
as the law governing the Notes and Coupons and may also refuse to recognise and enforce an
English court judgment awarded in connection therewith in the Republic of Croatia.
Risks related to the market generally
Set out below is a brief description of the principal market risks, including liquidity risk,
exchange rate risk, interest rate risk and credit risk:
The secondary market generally
The Notes may have no established trading market when issued, and one may never
develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able
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to sell their Notes easily or at prices that will provide them with a yield comparable to similar
investments that have a developed secondary market.
Exchange rate risks and exchange controls
The Issuer will pay principal and interest on the Notes in euro. This presents certain risks
relating to currency conversions if an investor's financial activities are denominated principally in a
currency or currency unit (the Investor's Currency) other than euro. These include the risk that
exchange rates may significantly change (including changes due to devaluation of the euro or
revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the
Investor's Currency may impose or modify exchange controls. An appreciation in the value of the
Investor's Currency relative to euro would decrease (1) the Investor's Currency-equivalent yield on
the Notes, (2) the Investor's Currency equivalent value of the principal payable on the Notes and
(3) the Investor's Currency equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past)
exchange controls that could adversely affect an applicable exchange rate. As a result, investors
may receive less interest or principal than expected, or no interest or principal.
Interest rate risks
Investment in the Notes involves the risk that subsequent changes in market interest rates
may adversely affect the value of them.
Legal investment considerations may restrict certain investments
The investment activities of certain investors are subject to legal investment laws and
regulations, or review or regulation by certain authorities. Each potential investor should consult its
legal advisors to determine whether and to what extent (1) the Notes are legal investments for it,
(2) the Notes can be used as collateral for various types of borrowing and (3) other restrictions
apply to its purchase or pledge of the Notes. Financial institutions should consult their legal
advisors or the appropriate regulators to determine the appropriate treatment of the Notes under
any applicable risk-based capital or similar rules.
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TERMS AND CONDITIONS OF THE NOTES
The following is the text of terms and conditions of the Notes which, subject to completion
and amendment, will be attached and (subject to the provisions thereof) will apply to each Note in
definitive form:
The c750,000,000 6.50 per cent. Notes due 5 January 2015 (the Notes, which expression
includes, unless the context otherwise requires, any further Notes issued pursuant to Condition 12
and forming a single series with the Notes) of the Republic of Croatia (the Republic), as
represented by the Minister of Finance, were authorised pursuant to the 2009 Budget Act. A fiscal
agency agreement dated 5 June 2009 (the Fiscal Agency Agreement) has been entered into in
relation to the Notes between the Republic, BNP Paribas Securities Services, Luxembourg Branch
as fiscal and principal paying agent (the Fiscal Agent) and the other paying agent named therein
(together with the Fiscal Agent, the Paying Agents). In these Conditions, Fiscal Agent and
Paying Agent shall include any successors appointed from time to time in accordance with the
provisions of the Fiscal Agency Agreement, and any reference to an Agent or Agents shall mean
any or all (as applicable) of such persons. The statements in these Conditions include summaries
of, and are subject to, the detailed provisions of the Fiscal Agency Agreement. The Fiscal Agency
Agreement includes the form of the Notes and the coupons relating to them (the Coupons).
Copies of the Fiscal Agency Agreement are available for inspection during usual business hours at
the principal office of the Fiscal Agent at BNP Paribas Securities Services, Luxembourg Branch,
33, rue de Gasperich, Howald-Hesperange, L­2085, Luxembourg and at the specified offices of
each of the other Agents. The holders of the Notes (the Noteholders) and the holders of the
Coupons (whether or not attached to them) (the Couponholders) are bound by, and are deemed
to have notice of, the provisions of the Fiscal Agency Agreement.
1.
Form, Denomination and Title
(a)
Form and Denomination
The Notes are serially numbered and in bearer form, in denominations of c50,000 and
integral multiples of c1,000 in excess thereof up to and including c99,000, each with Coupons
attached on issue. No Notes will be issued with a denomination above c99,000. Notes of one
denomination may not be exchanged for Notes of any other denomination.
(b)
Title
Title to the Notes will pass by delivery. The holder of any Note or Coupon will (except as
otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is
overdue and regardless of any notice of ownership, trust or any interest therein, any writing
thereon or any notice of any previous theft or loss thereof) and no person will be liable for so
treating the holder.
2.
Status
The Notes and Coupons constitute direct, unconditional, (subject to the provisions of
Condition 3) unsecured and unsubordinated and general obligations of the Republic. The Notes and
Coupons rank pari passu, without any preference among themselves, and at least pari passu in
right of payment with all other present and future unsecured obligations of the Republic, save only
for such obligations as may be preferred by mandatory provisions of applicable law.
3.
Negative Pledge and Other Covenants
(a)
Negative Pledge
So long as any of the Notes or Coupons remains outstanding (as defined in the Fiscal
Agency Agreement), the Republic will not grant or permit to be outstanding any mortgage, charge,
lien, pledge or other security interest (each a Security Interest), other than a Permitted Security
Interest, over any of its present or future assets or revenues or any part thereof, to secure any
Public External Indebtedness of the Republic or any other person or any guarantee of the Republic
in respect of Public External Indebtedness unless the Republic shall, in the case of the granting of
the security, before or at the same time, and in any other case, promptly procure that the
Republic's obligations under the Notes and Coupons are secured equally and rateably therewith.
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(b)
Certain Definitions
In these Conditions:
Permitted Security Interest means:
(i)
any Security Interest upon property (or any revenues therefrom) to secure Public
External Indebtedness incurred for the purpose of financing the acquisition or
construction of such property (or property which forms part of a class of assets of a
similar nature where the Security Interest is by reference to the constituents of such
class from time to time);
(ii)
any Security Interest existing on property (or any revenues therefrom) at the time of its
acquisition;
(iii)
any Security Interest arising by operation of law which has not been foreclosed or
otherwise enforced against the assets to which it applies;
(iv)
any Security Interest securing or providing for the payment of Public External
Indebtedness incurred in connection with any Project Financing provided that such
Security Interest only applies to (a) properties which are the subject of such Project
Financing or (b) revenues or claims which arise from the operation, failure to meet
specifications, exploitation, sale or loss of, or failure to complete, or damage to, such
properties; or
(v)
the renewal or extension of any Security Interest described in sub paragraphs (i) and (ii)
above, provided that the principal amount of the original financing secured thereby is not
increased.
Project Financing means any arrangement for the provision of funds which are to be used
principally to finance a project for the acquisition, construction, development or exploitation of any
property pursuant to which the persons providing such funds agree that the principal source of
repayment of such funds will be the project and the revenues (including insurance proceeds)
generated by such project.
Public External Indebtedness means any obligation for borrowed money which is (a) in the
form of or represented by notes, bonds or other similar securities and which is listed or capable of
being listed on any stock exchange and (b) denominated or payable, or at the option of the holder
thereof payable, in a currency other than the lawful currency of the Republic provided that, if at
any time the lawful currency of the Republic is the Euro, then any indebtedness as described in
(a) denominated or payable, or at the option of the holder thereof payable, in Euro, shall be
included in ``Public External Indebtedness''.
4.
Interest
Each Note bears interest from and including 5 June 2009 at the rate of 6.50 per cent. per
annum, payable annually in arrear on 5 January in each year until maturity (each an Interest
Payment Date). The first such payment, for the period from and including 5 June 2009 to but
excluding 5 January 2010 (and amounting to c38.11 per c1,000 principal amount of the Notes), will
be made on 5 January 2010. Interest will be paid subject to, and in accordance with, the
provisions of Condition 6.
The period beginning on and including 5 June 2009 and ending on but excluding the first
Interest Payment Date and each successive period beginning on and including an Interest Payment
Date and ending on but excluding the next successive Interest Payment Date is called an Interest
Period.
Each Note will cease to bear interest from and including the due date for redemption unless,
after surrender of such Note, payment of principal is improperly withheld or refused or unless
default is otherwise made in respect of payment, in which case it will continue to bear interest at
the rate specified above (as well after as before judgment) until whichever is the earlier of (a) the
day on which all sums due in respect of such Note up to that day are received by or on behalf of
the relevant Noteholder and (b) the day on which notice has been given to the Noteholders that
the Fiscal Agent has received all sums due in respect of the Notes up to such day (except, in the
case of payment to the Fiscal Agent, to the extent that there is any subsequent default in
payment in accordance with these Conditions).
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