Serbia borrows USD 1.5 billion

Serbia has priced another issue of 10Y sustainability eurobonds in dollars in the international financial market, while the funds raised will be used for sustainable projects in the field of green agenda and socially responsible activities, said the National Bank of Serbia (NBS).

Bonds were sold in the total amount of 1.5 bn US dollars, while investors’ demand during the day was multiple times higher, exceeding 6.5 bn US dollars, the NBS said.

“The huge demand of international investors for Serbia’s eurobonds clearly testifies to their confidence in the long-term sound and sustainable economic indicators of our country. This is the second Serbia’s ESG (Environmental, Social, and Governance) issue following the green bond issue in 2021,” claimed the Serbian central bank.

It added that, as in the case of “previous issues of dollar eurobonds, taking care of public debt sustainability, the Republic of Serbia concluded hedging transactions, converting liabilities under dollar-denominated eurobonds into euros, in order to reduce both the currency and interest rate risk.”

“By doing so, the Republic of Serbia has reduced exposure to the USD/EUR exchange rate risk, but also the country’s de facto cost of borrowing so that after the hedging it equals 4.75 percent. This is an outstanding result, considering the recent coupon rates achieved by comparable countries, with an investment grade, such as Romania (5.2 percent for 8Y bonds and 5.625 percent for 13Y bonds),” said the NBS.

It added that the Wednesday auction “attracted hundreds of eminent investors from all over the world.”

Serbia’s Finance Minister, Sinisa Mali, said that the money would be spent on organizing EXPO 2027, as well as the construction of the Belgrade subway and the Belgrade-Budapest fast railway, as well as projects for recycling, boosting energy efficiency and others.

(Nova Ekonomija, 06.06.2024)


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