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Interest grows in Serbian corporate bonds

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The Serbian financial market is abuzz with anticipation as the Ministry of Finance gears up to introduce several corporate bonds onto the domestic market.

According to recent announcements from the Ministry of Finance, Serbia could see the debut of its first genuine corporate bonds as early as May this year. “Bloomberg Adria” reported yesterday that the bonds are garnering significant interest from “numerous domestic companies” as part of the Ministry’s strategy to revitalize the capital market in collaboration with the World Bank.

While the Ministry plans to finalize contracts with selected candidates by the end of April and subsequently initiate formal preparations for the inaugural corporate bond issuances, market experts are closely monitoring the developments with both interest and skepticism.

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“It’s definitely worth a shot. If it doesn’t succeed initially, we should persist. Apart from banks, our financial market has been largely neglected over the past fifteen years. The Belgrade Stock Exchange is virtually inactive, as is the corporate securities market. If state-sponsored initiatives could breathe new life into these sectors, that would be beneficial,” remarked Milojko Arsić, a professor at the Faculty of Economics in Belgrade.

Arsić emphasized the potential value of corporate bonds, noting their prevalence in the United States and their favorable terms compared to traditional bank loans.

Meanwhile, the Ministry of Finance has issued a public call for expressions of interest from consultants tasked with overseeing the issuance of corporate bonds in Serbia. The deadline for submissions is April 2, as reported by the eKapija portal.

Although these forthcoming corporate bonds may appear to be the first of their kind in Serbia, they follow a series of bonds already listed with the Central Register of Securities (CRHOV), including those issued by companies such as “Mlekara Šabac,” “Jugoimport SDPR,” and “Telecom Serbia.” However, these bonds, issued as part of the state’s pandemic support program for businesses, have yet to establish a functioning secondary market.

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Nenad Gujaničić, chief broker at Novi Sad’s “Momentum Securities,” explained that while there was significant demand for these pandemic-era bonds, their liquidity remains limited, posing a challenge for market development. He emphasized the importance of a robust government debt market and stock exchange for the growth of a quality corporate bond market.

While the introduction of corporate bonds presents an opportunity for diversifying financing options for Serbian companies, experts caution that broader market reforms will be necessary to ensure their long-term success and liquidity.

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