SUCCESSFUL EUROBOND SALE, INVESTOR CONFIDENT OF SRPSKA POLICIES

BANJA LUKA, MARCH 26 /SRNA/ – Republika Srpska has successfully carried out borrowing on the international capital market by issuing a benchmark eurobond in the amount of EUR 500 million, with a fixed interest rate of 6.25 percent and maturity in April 2031, the Republika Srpska Ministry of Finance announced.

The transaction, as emphasized, represents a significant step forward on the international capital market, considering that Republika Srpska reopened the international capital market after the outbreak of the war in the Middle East, completing the first issuance from a developing market in Europe since the start of the conflict.

“This demonstrated leadership capabilities in conditions of increased volatility in global financial markets,” the statement reads.

The Ministry stated that the investor portfolio is geographically diversified, with a dominant share of investors who are investing in the public debt of Republika Srpska for the first time, including some of the largest American pension funds and insurance companies.

“This is the first benchmark bond of Republika Srpska listed on the London Stock Exchange, as well as the largest international borrowing of the entity so far, carried out despite turbulent market conditions caused by the war in the Middle East,” the Ministry of Finance noted.

It adds the largest demand in the history of Republika Srpska’s borrowing was achieved, almost three times higher than during the first eurobond issuance in 2021, which clearly confirms investors’ confidence in the policies implemented by the leadership of Republika Srpska internationally.

The Ministry emphasizes that demand reached more than one billion Euros just a few hours after the transaction was announced.

“Given the changed circumstances in international financial markets, it is clear that a significant relative reduction in borrowing costs has been achieved compared with the 2021 transaction,” the statement said.

The spread, it adds, has practically been halved, indicating improved positioning of Republika Srpska on the international capital market, based on the development of domestic economic conditions as well as cooperation with partners from the EU and the United States.

The Ministry points out that this is particularly significant considering that global interest rates today are approximately three times higher than at the time of the first issuance.

“The transaction represents an example of responsible and strategic management of public debt, with Republika Srpska being the fourth issuer from the region to access the international capital market this year, after Slovenia and Croatia, EU member states, and North Macedonia, a candidate country,” the statement read.

The borrowing was carried out with a fixed interest rate, which provides protection against potential, already announced, future interest rate increases by the European Central Bank.

“The transaction followed intensive strategic activities by the Government and the Ministry of Finance at the international level, including direct contacts with more than fifty of the world’s largest investors, who expressed confidence in the team of the Ministry of Finance and the Republika Srpska Government,” the statement said.

The Ministry noted that history shows that geopolitical crises can escalate quickly and lead to strong inflationary shocks, such as the one in 2022, and that in this context timely management of public debt in conditions of heightened geopolitical risks represents one of the key responsibilities of every responsible government.