Financing Development of Tourism in Croatia through Future Flow Securitization

The trend of rapid development in the tourist industry set by international tourist demand provides opportunities for various entrepreneurial initiatives and investment in a continuously growing sector. Tourism cannot develop without strong financial instruments of any kind. It needs expensive projects and investments in infrastructure, accommodation capacities, objects and human resources. Foreign experiences show that besides long-term bank loans, there are other sources of financing which are not present or recognized enough. One of the newest financial instruments is securitization based on future revenues from tourism. It is one of the most exciting areas of application of securitization, particularly from emerging market countries. Securitizing future receivables from tourism can allow the country borrowers with good credit to overcome sovereign credit ceilings and raise financing in international capital markets. It allows the originator to borrow more than under traditional funding methods, as well as at lesser cost. Securitization also allows issuers from developing countries to lengthen the maturities of their debt, improve risk management and balance sheet performance, and tap a broader class of investors. From investors’ point of view, the attractiveness of this asset class lies in its good credit rating and its stellar performance in both good and bad times.