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Serb Yields Fall on Government Sale of 3-Year Dinar Bonds

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Feb. 19 (Bloomberg) -- Serbian borrowing costs dropped more than two percentage points as the government offered three-year dinar debt.

Yields declined 2.56 percentage points to 11.39 percent as investors bought 18.92 billion dinars ($226.8 million) of 20 billion dinars of three-year bonds with a 10 percent coupon being offered, according to the Debt Management Agency’s e-mailed statement, released after the bond sale. Investors’ bids stood at 23.8 billion dinars, the Belgrade-based agency said.

The yield drop was the biggest between two auctions over the past 12 months. The government last put on sale the three-year dinar bonds with a 10 percent coupon on Dec. 4, selling 42 percent of the offered amount at an average yield of 13.95 percent.

Today’s auction was the first after Prime Minister Ivica Dacic’s Cabinet raised $1.5 billion in a benchmark seven-year Eurobond sale on Feb. 14, its third foreign bond sale since taking office on July 27.

The dinar traded almost unchanged at 111.3562 to the euro at 12:46 p.m. in Belgrade, according to data compiled by Bloomberg.

Serbia is trying to lower the cost of borrowing after interest-rate payments on external and domestic debt rose 52.2 percent on year to 90.13 billion dinars in 2013. The Finance Ministry wants to use part of the funds raised through Eurobond sales for early repayment of more-expensive debt.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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