The Republika Srpska has raised debt on the international capital market by issuing a benchmark eurobond in the amount of 500 million euros, with a fixed interest rate of 6.25 percent, maturing in April 2031.
The Ministry of Finance of the RS states that this transaction represents a significant step forward on the international capital market, taking into account the following key factors:
The Republika Srpska opened the international capital market after the outbreak of the war in the Middle East, implementing the first issue from an emerging market on the European continent after the start of the conflict, thus demonstrating leadership capabilities in conditions of increased volatility on global financial markets. The investor portfolio is geographically diversified, with a dominant participation of investors who are investing in the public debt of the Republika Srpska for the first time, including the largest American pension funds and insurance companies.
This is the first benchmark bond of the Republika Srpska, listed on the London Stock Exchange, as well as the largest international debt of the entity to date, implemented despite the turbulent market conditions caused by the war in the Middle East.
The highest demand in the history of Republika Srpska’s borrowing was achieved, almost three times higher than the first Eurobond issue in 2021, which clearly confirms the confidence of investors in the policies pursued by the leadership of Republika Srpska internationally. 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 the cost of borrowing was achieved compared to the 2021 transaction. More precisely, the spread was practically halved, indicating an improved positioning of Republika Srpska in the international capital market, based on the development of domestic economic opportunities, as well as cooperation with partners from the European Union and the United States. This is especially significant considering that global interest rates are currently approximately three times higher than at the time of the first issue.
The transaction represents an example of responsible and strategic public debt management, with the Republika Srpska being the fourth issuer from the countries of the region to access the international capital market this year, after Slovenia and Croatia, members of the European Union, and North Macedonia, a country with candidate status.
The borrowing was carried out at a fixed interest rate, which provided protection from potential, already announced, future interest rate increases by the European Central Bank.
The transaction was carried out after intensive strategic activities of the Government and the Ministry of Finance on the international level, including direct contacts with more than fifty of the largest global investors, who expressed confidence in the Ministry of Finance team and the Government of the Republika Srpska.
The relevant ministry said that history teaches us that geopolitical crises can quickly escalate and lead to strong inflationary shocks, such as the one in 2022.
“In this context, timely management of public debt in conditions of increased geopolitical risks is one of the key obligations of every responsible government,” the Republika Srpska Ministry of Finance said in a statement.
