Individual data on specific investors in the government bonds of the Republic of Serbia are confidential and can be shared or disclosed only with the approval of the investors themselves, which is neither the case nor the common business practice in financial markets.
This is the response from the National Bank of Serbia (NBS) to Forbes Serbia’s question about who the investors are that, according to previous statements from the NBS, showed such interest in domestic securities last week.
Namely, on January 18, the NBS boasted a very successful realization of the issuance of eight-year dinar bonds of Serbia, with a note that there was “enormous demand from investors for the securities of the Republic of Serbia.”
“Thanks to the exceptional attractiveness that dinar-denominated securities have generated and almost record demand from investors, the realization at this auction, where 63.15 billion dinars worth of bonds were sold at face value, is the largest ever in a single issuance of dinar-denominated bonds of the Republic of Serbia,” the NBS emphasized at that time.
However, the central bank provided Forbes Serbia with somewhat more specific data about investors. We learned that it involves foreign investors primarily based in the United States, the United Kingdom, but also in Europe, and that among them are mostly banks, pension funds, and insurance companies.
According to the NBS, the largest individual investors in the mentioned bonds were domestic banks. They invested in almost half of the total amount sold.
“On last week’s auction of eight-year dinar-denominated government bonds, a large number of eminent investors from the domestic and international environment expressed interest, primarily consisting of reputable institutional investors. International institutional investors, banks, pension funds, investment banks, insurance companies, hedge funds, and others, mainly based in the USA, the United Kingdom, and Europe, represent credible and important investors in government and corporate bonds on almost all developed and developing market countries,” stated the NBS.
As they add, these foreign investors are responsible for purchasing almost 40 percent of the sold dinar-denominated bonds at the primary auction last week. Such a result pleases the NBS because, as they say, “it contributes to reducing the yield, i.e., increasing the prices of Republic of Serbia bonds, or influences our country to be financed under more favorable financial conditions.”
When it comes to foreign investors, the NBS also emphasizes that the investor base in the bonds of the Republic of Serbia has expanded in recent years.
“This trend, which we have observed for almost the entire previous decade, also indicates that we do not depend on the investments and demand of a few investors who have been investing in the bonds of the Republic of Serbia for a long time. Instead, there are more and more new investors who, by directing their funds into Serbian bonds for the long term, express confidence in the sound economic policies led by relevant institutions in Serbia,” explained the NBS.
Also, the central bank notes that the largest investors in the mentioned bonds were domestic banks (almost half of the total sold amount). Besides banks and non-residents (international investors), other institutional investors such as insurance companies, domestic pension funds, and others, as well as certain individuals, invested in these government bonds.
As a reminder, on January 18, Serbia completed the second reopening of eight-year dinar bonds maturing in 2031, making it the third issuance after the initial one held on October 23, 2023. The auction saw the sale of RSD 63.15 billion in bonds at a yield of 6.15%.
The total value of the issuance of benchmark eight-year bonds is RSD 110 billion, with 105.6 billion dinars, or 96% of the nominal value of these bonds, sold in three auctions (October and December 2023 and January 18, 2024).
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