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Serbia issues debut sustainable bonds on international market, raising $1.5 billion for green and social projects

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In a historic move, the Republic of Serbia has ventured into the realm of sustainable bonds on the global market, securing a substantial $1.5 billion for financing green projects and social responsibility initiatives. This significant development was announced by Sinisa Mali, the First Deputy Prime Minister and Minister of Finance.

Mali emphasized that the overwhelming interest from investors serves as a testament to the stability and growth trajectory of Serbia’s economy. He underscored the nation’s impressive first-quarter growth rate of 4.7%, expressing a commitment to sustaining such robust growth to drive the “Leap into the Future – Serbia 2027” program, comprising 323 projects across the country. Mali highlighted Serbia’s maintenance of macroeconomic stability, with public debt as a percentage of GDP standing at 47.6%, well below the Eurozone’s 89%.

Furthermore, Mali revealed that Serbia is the first non-EU country below the investment-grade threshold to issue socially sustainable bonds, marking a significant milestone in the nation’s financial landscape. He outlined several projects benefiting from this financing, including support for first-time homebuyers, rural housing initiatives, healthcare advancements, and educational infrastructure development.

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On the environmental front, Mali pointed to projects such as the Belgrade metro and the Belgrade-Budapest railway, underscoring Serbia’s commitment to green initiatives. Notably, this issuance follows Serbia’s successful foray into green bonds in 2021, demonstrating the nation’s alignment with global trends in sustainable financing.

The issuance comprised 10-year bonds with a coupon rate of 6% in USD, resulting in an interest rate of 4.754% after a swap transaction. Mali highlighted the favorable pricing achieved during the auction, with a 40-basis-point reduction from the initial rate, indicative of strong investor demand totaling $6.5 billion.

This successful debut underscores Serbia’s attractiveness to international investors, bolstering its credibility and signaling confidence in its economic policies. Mali emphasized the strategic advantage of issuing dollar-denominated bonds, citing examples from neighboring countries that have found success in the international capital market.

Sustainable bonds represent a pivotal step towards financing green and socially responsible projects, reflecting Serbia’s commitment to sustainable development and responsible financial stewardship.

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