The shareholders’ assembly of Telekom Srbija has approved the issuance of long-term, unsecured and unsubordinated bonds during an extraordinary session, as confirmed by the company to Biznis.rs. This move allows Telekom to offer corporate bonds valued between €400 million and €850 million, or the equivalent in US dollars, to qualified investors in the international financial market. The Republic of Serbia holds the majority stake in Telekom Srbija, with a share of 58.11%.
In an interview with the October issue of Biznis.rs, General Director Vladimir Lučić emphasized that the objective of issuing these corporate bonds is not to increase debt, but to refinance existing less favorable loans. He noted that the timing of the bond issuance is influenced by various global uncertainties.
“The actual timing will depend on our assessment and that of our partner in this process, Bank of America. It could happen as early as the end of October or in the first quarter of next year,” Lučić explained. He assured that this time, Telekom Srbija would receive a rating, enter the stock market, and proceed with the bond placement, with timing and market procedures being the main considerations.
It is worth noting that Telekom Srbija plans to issue Eurobonds—denominated in euros or dollars—ranging from €400 million to €850 million, as indicated in a previous report by N1. Additionally, on September 25, 2020, Telekom Srbija issued its first corporate bonds worth 23.5 billion dinars, approximately €200 million, to gather necessary funds during the COVID-19 pandemic.
The 2020 bonds were comprised of 2,350,000 dinar bonds, each with a nominal value of 10,000 dinars. Initially, the interest rate was set at three-month BELIBOR plus 2.95 percentage points, equating to a rate of 3.97% at the time of sale. However, with the increase in interest rates since then, the current interest rate has risen to 7.84%.
The bonds were part of a broader governmental effort in April 2020 to mitigate the pandemic’s effects, which included streamlined procedures for issuing corporate bonds and allowing the National Bank of Serbia to purchase these bonds on the secondary market.
Buyers of the dinar bonds included commercial banks in Serbia, which later sold the securities to the NBS. The NBS noted that these bonds had a maturity of five years and were fully denominated in dinars, reducing foreign exchange risk.
The State Aid Control Commission determined that the issuance of Telekom Srbija’s corporate bonds was not a form of state aid, as the transactions were conducted under market conditions. The commission reported that five banks participated in the purchase of the corporate bonds, with some retaining a portion in their portfolios while others sold some on the secondary market.
Overall, this latest decision marks a significant step for Telekom Srbija in its financial strategy, aiming to optimize its debt structure while preparing for future investments.
