Eurobond yields are falling

Published on 28. March 2023., News

Yields on government bonds have fallen in the last few weeks, and at the last auction of Eurobonds the yield was 5.65 percent per year, which is lower than the February issue by 20 basis points (or 0.20 percent).

The demand was similar in these two auctions, and it is obvious that the state decided to lower the yields a bit, said Nenad Gujaničić, chief broker at Momentum Securities.

“Currently, the state does not have a great need for liquidity, so it can relatively relax issues of debt securities on the domestic market.” “Apparently, the state has decided to lower the yields a bit, and therefore the buyers who submitted weaker offers were left without papers,” said Gujaničić.

These two-year bonds were sold at a yield of 5.65 percent, which is 20 basis points lower, as he said, compared to the auction that was held on February 21 with significantly higher turnover.

The cycle of sharp interest rate hikes by central banks that marked last year, as he recalls, led to a general increase in interest rates on all world markets.

“Thus, government Eurobonds, which only a year or two ago had yields of less than two percent, during October of last year reached yields of more than eight percent.”

The expected decrease in inflation, and especially the recent crisis in the banking sector, which could tighten credit activity and reduce economic growth, has led to a drop in yields in recent weeks, which also happened with Serbian debt securities,” Gujaničić said.

Thus, the yields on Eurobonds fell well below the level of six percent, as he recalls, after having been between six and 6.5 percent annually since the beginning of the year.

The state sold at auction two-year bonds in the amount of 6.21 billion dinars, the issue of two-year state bonds was reopened (on March 23 of this year) and matures on January 25, 2025, announced the Public Debt Administration.

The total volume of demand at the auction was 21.8 billion dinars. 621,734 pieces of government bonds were sold, with a nominal value of 6.2 billion dinars.

Government bonds were sold at a yield rate of 5.65 percent per annum.

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