The EMBI (Emerging Markets Bond Index) risk indicator for Serbia, based on the debt in US dollars, has ceased to be published after more than 15 years, the National Bank of Serbia (NBS) announced.
The reason is that less than 13 months remained in circulation until the maturity of the only dollar Eurobond in Serbia, when, according to the criteria of the renowned American financial institution J.P. Morgan, the bond is excluded from the calculation.
The cessation of the calculation of the EMBI indicator for Serbia, based on the debt in dollars, therefore indicates the absence of dollar Eurobonds of Serbia on the market.
“Thanks to favorable monetary and fiscal developments and successful entry into the international financial market, Serbia has prematurely bought a significant part of the expensive debt on the basis of dollar Eurobonds. This expensive and foreign currency risk debt has been replaced by much cheaper financing in euros. The share of the dollar in public debt has been reduced, and thus the country’s exposure to the foreign exchange risk of the movement of the dollar against the euro,” the statement said.
It is added that the trend of reducing the risk premium for Serbia started in the second half of 2013.
In the last seven years, the EMBI for Serbia has decreased by 357 basis points (from 460 to 103 basis points), which is the most significant decrease among 43 developing countries.
“In the same period, EMBI Global increased by 10 basis points. It is clear that during the last seven years, the decrease in the dollar risk premium of Serbia is the result of exclusively domestic factors – establishing and preserving macroeconomic stability, which resulted in strengthening investor confidence,” Nova Ekonomija reports.
