The new financing price of Serbia is 1.066%. On Monday, the Republic of Serbia issued a ten-year Eurobond in the amount of 1.2 billion dollars on the international financial market, at a coupon rate of 2.125% and a yield rate of 2.35%, the NBS announced.
These are the lowest interest rates so far, that is, the best conditions that our state has achieved for financing in dollars. At the same time, in order to protect the public debt from foreign exchange risk, ie from volatility in the movement of the euro exchange rate against the US dollar, Serbia swapped the so-called “hedging”, which replaced the liabilities on the basis of this Eurobond from the dollar to the euro and thus achieved a de facto coupon rate for financing in euros of 1.066%.
This is the lowest financing rate of our country ever and, although achieved during the global crisis, it is even lower than the coupon rate that Serbia achieved last year (1.50%).
– Today’s transaction is another confirmation that international investors recognize our country as a safe investment destination. Every entry on the international market represents a test of investor confidence in the sustainability of macroeconomic stability, which is of special importance today, because that trust was gained in conditions when the world economy is facing the biggest challenge since the Great Depression – Governor Jorgovanka Tabakovic points out.
The delegations of the National Bank of Serbia and the Ministry of Finance previously successfully completed all talks with international investors and financial institutions, thanks to which, during today’s auction, a huge demand from investors for Serbian bonds was once again achieved.
Demand was many times higher than the issued 1.2 billion dollars (it exceeded the amount of 6 billion dollars), with over 200 reputable investors from all over the world showing interest. Such a high interest in Serbian bonds has enabled the rate of return during the auction to decrease significantly (by as much as 40 basis points) compared to the initial conditions.
Most of the funds collected by today’s transaction (in the amount of 900 million dollars) will be used for early repayment of a significant part of the remaining debt on the basis of expensive dollar Eurobonds issued in 2011 (at a high yield of 7.50%).
– In this way, our country once again managed to replace the expensive dollar debt with a cheaper one on the international market – the governor points out. The achieved interest rate is the lowest that Serbia has achieved so far on the international financial market and many times lower compared to the interest rate achieved during the previous issue of a ten-year Eurobond in dollars in 2011. It is also a confirmation that Serbia has completely positively transformed its economy, readily welcomed this crisis, as well as resolutely strives to completely replace the last remnants of irresponsible behavior from the past and expensive borrowing with a rational and responsible attitude towards its people. The mentioned success places Serbia among the countries whose credit rating is of investment rank, which, in the absence of the crisis, would be officially confirmed by the rating agencies – the governor emphasized.
In addition to the fact that the best financing conditions have been achieved, that for the first time so far the so-called “hedging” transaction (transaction for protection against foreign exchange risk), today’s auction is unique in that it was realized for the first time within the so-called. “Global Medium Term Note (GMTN)” program, which will significantly facilitate the process of Serbia’s future entry into the international market, if there is a need for it in the coming period. With the issue of the dollar Eurobond, Serbia will become even more visible on the international market, because, after a short time, it will again be included in the reference EMBI index in dollars – one of the most recognizable indicators of the country’s risk premium.
– The foundations of today’s success are the result of the determination of the President, the National Bank of Serbia and the Government of the Republic of Serbia to strengthen the Serbian economy and preserve macroeconomic, monetary, fiscal and financial stability. The stability present over the years has increased our country’s resilience to environmental challenges, opened space for achieving increasingly favorable financing conditions, preserving public debt within Maastricht, and all this has provided significant assistance to the domestic economy and citizens, in an environment of high uncertainty and global virus pandemic – Tabakovic underlined, eKapija reports.
