bne IntelliNews – bneGreen: Serbia has issued a first green Eurobond of € 1 billion


Serbia issued its first green Eurobond on September 16. The € 1 billion Eurobond has a maturity of seven years and a coupon rate of 1.00%, the lowest ever achieved by the country on the international market.

At the same time as the green Eurobond was issued, a 15-year Eurobond of 750 million euros was issued, with an annual coupon rate of 2.05%, said Serbian Finance Minister Sinisa Mali. This set another precedent as the 15-year bond secured Serbia’s funding in the international financial market for the longest period to date.

The green bond was issued in accordance with the government’s strategic plan to invest additional funds to finance environmental protection and climate change mitigation projects. It will help improve energy efficiency, the waste management system and ensure the most rational use of renewable energy sources.

Europe is already the world leader in green and sustainable bond issuance, and a growing number are now issued by sovereigns and companies from Central and Eastern Europe (CEECs).

Slovenia was the first country in the South-Eastern European region where a green bond was issued and, in June of this year, it became the first ruler of the wider EEC region and the second of the EU to issue a sustainability bond. Serbia has now become the first non-EU European country to issue a sovereign green bond, according to the Serbian finance ministry.

“[T]he Republic of Serbia is one of the few European countries to have issued green Eurobonds on the international financial market, and which are exclusively intended for financing environmentally friendly projects, ”added Mali.

The high level of demand has enabled Serbia to offer favorable interest rates for the two Eurobonds. The total demand amounted to more than 6 billion euros from more than 200 investors, which made it possible during the auction to reduce the interest rate by 0.35 percentage point (pp) on seven-year green bonds and 0.30 pp on the 15-year bond.

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

Mali stressed that the state is committed to increasing investments in ecology and environmental protection, as well as providing the most favorable funds for green projects from new sources of finance, such as the green bond market.

“The Republic of Serbia courageously entered the international capital market and offered its green bond, worth € 1 billion, although the demand was much higher. Thanks to the high interest, the interest rate of the green bond has been reduced by up to 20% compared to the initial rate, which proves the rationale for the decision to issue this type of bond. green program and this is another indicator of Serbia’s commitment and commitment to green projects and increased investment in ecology. It is also an important signal for investors to strive to build their capacities and invest in environmental protection, ”Mali said, according to a statement from the Ministry of Finance.

He added that the green bond market has grown rapidly in recent years with the aim of securing funding for projects that contribute to environmental sustainability in the broadest sense. “Every year the whole world – and Serbia is no exception – invests more and more in ecology and environmental protection, and investors have recognized this,” said the minister.

“The funds from the green bonds issued will also be used to finance and refinance the costs related to the construction of drinking water treatment plants and wastewater treatment plants, for the construction of modern subways and railways, flood protection, biodiversity conservation, pollution control and prevention, waste collection, treatment and recycling, energy efficiency and renewable energy sources. These funds will be strictly controlled and cannot be used for other purposes, which clearly demonstrates our commitment to ecology, ”Mali said.

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