Serbia’s Public Debt Administration has announced the third issue of 10.5% annual bonds for May 13, with a value of 43.5 billion dinars (approximately 372 million euros). These bonds are part of the remaining portion from the 180 billion dinar issue in January. Serbia is borrowing through dinar-denominated securities with a coupon rate of 5.25% (semi-annual coupon payments), maturing on July 27, 2035. If there is sufficient investor interest, the total public debt this year could reach 7.2 billion euros.
In the previous two auctions of these bonds, investor sentiment has varied. The first auction saw strong interest, while the second showed a clear decline in buyers. In January, nearly the entire initial issue of 120 billion dinars was sold, with the state securing buyers for 111.34 billion dinars at a yield and coupon rate of 5.25%. Following the strong demand, the Ministry of Finance decided to increase the issue by 60 billion dinars, though only about a third of the increased offering was realized.
In addition to this bond issue, Serbia faces further debt obligations this year. Analysts from Erste Group predict “refinancing activities” to remain diversified, including Eurobond issuance (up to 2 billion euros), domestic issues (up to 2.1 billion euros), and commercial loans (up to 3.1 billion euros). This brings an additional 7.2 billion euros of debt to the budget, further increasing public debt, which is already at a relatively high level.
Auctions and bond issues are mechanisms through which the state borrows funds. At the end of the borrowing term, the issuer is required to repay the principal amount, along with any accrued coupon payments. Due to persistent inflation and less favorable borrowing conditions compared to previous years, Serbia is borrowing under more challenging terms. Some experts have already predicted a budget rebalance for this year, and it remains to be seen how much the Ministry of Finance will adjust its initial plans, especially as GDP growth expectations have been revised downward by many financial institutions.
As of February, Serbia’s public debt stood at 44.3% of GDP.
