National Bank of Serbia

Serbia repays $725 million debt

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Serbia repaid on Tuesday (Sept. 28) a $725 million debt that included over $25 million in interest, Serbian Finance Minister Sinisa Mali said. He added that through part of the proceeds from the issuance of a 15-year 750 million eurobond with a 2.05% coupon rate that had been issued on September 16, the Balkan country repaid the overly expensive debt from 2011.

In a written statement, Mali said the debt from 2011 was an example of bad borrowing due to an extremely high 7.25% interest rate. “Due to that, as well as due to other bad moves, the government was forced to undertake tough fiscal consolidation measures to avoid a complete collapse and move away from the brink of an abyss”  the minister said.

Earlier this month, Serbia placed a dual-tranche Eurobond issue that included  a fifteen-year €750 million eurobond with an annual coupon rate of 2.05% and its first-ever green eurobond with Deutsche Bank acting as joint bookrunner.

The €1billion Eurobond has a maturity of seven years and a 1% annual coupon or interest rate, which the National Bank of Serbia (NBS) said was the lowest ever the country has ever achieved on the international market. The green bond issue was oversubscribed by more than three times, according to NBS.

The issues were preceded by several days of talks between Serbian delegation and a large number of investors from all over the world.

Serbia has become one of the few European countries and the only European country outside the EU that has issued a green instrument, NBS added.

The green bond was issued in accordance with the government’s strategic plan to invest additional funds to finance projects in the areas of renewable energy, energy efficiency, transport, sustainable water management and pollution prevention and control.

In early June, Serbia’s government established an Interdepartmental Working Group on Green Bonds, with the task to prepare a Green Bond Framework in accordance with the standards of the International Capital Markets Association (ICMA Principles).

On Sept. 9, the government adopted a Green Bond Framework, marking the first Balkan country to publicly declare a commitment to promote ESG awareness and projects in the field of climate change mitigation and environmental protection.

Green bonds have seen enormous growth in recent years. By issuing green bonds, Serbia intends to increase awareness of the importance of sustainable financing and to promote it both internationally and locally, within the Serbian financial and capital markets sectors, the statement by the Government reads.

Slovenia was the first country in the Southeast Europe region where a green bond was issued.