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The Catalan Government issues 3,700 million euros in one and two year retail bonds

The 3.7 billion euros may be increased to 4 billion euros depending on demand. After the first day, the offer of bonds raised “high interest” according to financial sources. Citizens will be allowed to buy a minimum quantity of 1,000 euros and a maximum of 2 million euros. The Government is issuing bonds that expire in one year at an interest rate of 4.75%, and others expiring in two years at an interest rate of 5.25%. The Catalan Finance Minister stated that this bond offer is “safe and attractive”. It is the third emission of retail bonds in the Catalan Government’s history. The current bond emission mainly aims to replace those from the first emission, which expire next November 21st.

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24 October 2011 10:19 PM

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ACN

Barcelona (ACN).- The Catalan Government began issuing retail bonds on Monday in order to fund its debt. The bonds are to be bought by private citizens through bank branches in Catalonia. After the first day, the purchase rate is even better than the most optimistic forecasts, according to different financial sources. Some of the participating banks had sold 20% of the total bonds they have been assigned after the first day. The Catalan Government is offering 3.7 billion euros in bonds, which might be increased up to 4 billion euros depending on demand. Individual citizens can purchase between 1,000 euros and 2 million euros, from Monday until November 14th. Citizens can buy two types of bonds: those expiring in one year and those expiring in two; the first kind have an interest rate of 4.75% and the second type 5.25%. According to the Catalan Minister for Finance, Andreu Mas-Colell, these retail bonds are a \u201Csafe and attractive\u201D operation, as the Catalan Government is \u201Ca solid\u201D entity. Government Spokesperson, Francesc Homs, stated on Monday that the bonds are \u201Ca very good opportunity\u201D and \u201Ca fine business\u201D for citizens, as it is a \u201Csafe and guaranteed\u201D investment with high profitability. In addition, Homs stressed that by buying bonds, citizens not only participate in a profitable financial operation but help the Government out by finding financial resources, now that financial markets are particularly difficult for southern European economies.


As planned some weeks ago, the Catalan Government issued retail bonds once again. It will be the third time in its history; the third in the last 12 months. The previous Left-Wing Government issued 3 billion euros in retail bonds in October 2010, expiring in November 2011. The operation was a complete success as bonds were massively bought by citizens. Last April, the new Catalan Government, run by the Centre-Right Catalan Nationalist Coalition CiU, issued retail bonds once again. This time 3.2 billion euros were offered and citizens could buy one-year and two-year bonds. The operation was also a success. Since the bonds from the first issue expire on November 21st, the Catalan Government decided to issue new bonds once again, confirming this method as a regular source of cash for the Government.

The interest rates currently offered are slightly higher than previously planned, since rating agencies are downgrading the Spanish Autonomous Community debt rating. However, according to the Catalan Finance Minister, former Harvard professor Andreu Mas-Colell, they are \u201Cnot relevant\u201D since the rating agency decisions are mainly \u201Cconditioned\u201D by the current international financial situation, and not so much focused on the particular situation in Catalonia. Mas-Colell defended last Friday, during a conference with entrepreneurs organised by Barcelona\u2019s Chamber of Commerce, that the Catalan Government is \u201Ca solid\u201D entity. Therefore, buying Catalan bonds is \u201Csafe\u201D and \u201Cattractive\u201D, considering the interest rates.

The one-year bonds will have an interest rate of 4.75%. Those of two years, an interest rate of 5.25%. In addition, the participating banks will add their own commission, which will range between 2% and 2.2%. 27 independent financial entities are participating in this new operation. According to different sources from some of the participating banks, both types of bonds are being bought at equal levels. The same sources indicate that the first day has been a success and some entities have already sold 20% of the bonds they had been assigned. Bonds can be bought from Monday to November 14th. Citizens will have to make the payment on November 21st, coinciding with the day the Catalan Government has to pay back the bonds and the interest from the first issue. Therefore, citizens who bought bonds last year, can use this money to buy new ones this time.

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  • The Catalan Finance Minister, Andreu Mas-Colell, last Friday at an economic conference in S'Agaró (by T. Tapia)

  • The Catalan Finance Minister, Andreu Mas-Colell, last Friday at an economic conference in S'Agaró (by T. Tapia)