Serbia Seeks $3 Billion in Financing Abroad, Dinkic Says

Serbia will seek as much as $3 billion in funds abroad in 2013 to finance its debt and doesn’t need international aid, Finance Minister Mladjan Dinkic said.

“This year we should borrow from international markets $3 billion, $2 billion in Eurobonds and $1 billion from Russia,” he told a panel at a Euromoney conference in Vienna today. “We’re diversifying our sources” of financing and the sale of $1 billion in seven-year bonds should be “very soon,” he said.

The country sold $750 million in five-year notes with a 5.25 percent coupon on Nov. 14. Demand was $3.7 billion, which the Finance Ministry said allowed it to increase the size of the sale from $500 million. The yield at the sale, Serbia’s second foreign offering in 2012, was 5.45 percent.

Prime Minister Ivica Dacic’s Cabinet, in office since July 27, has pledged to bring down the widest deficit since the 2000 ouster of former strongman Slobodan Milosevic. The 2013 state budget targets a deficit of 3.6 percent of gross domestic product, from 6.7 percent last year.

Serbia will need 493.6 billion dinars ($5.9 billion) next year to service all its debt, 25 percent more than in 2012. The government has said it will rely on dinar- and euro-denominated debt sales at home and dollar-denominated Eurobonds abroad until Serbia’s BB- credit rating at Standard & Poor’s and Fitch Ratings is upgraded.

Cheap Financing

“Financing externally is so cheap at the moment that any sovereign worth its salt/rating probably should be coming to market to get some cash in the bank, and the earlier and cheaper the better,” Tim Ash, chief emerging-markets strategist at Standard Bank in London, said by e-mail.

Dacic has yet to convince the International Monetary Fund that Serbia is able to adhere to the budgeted fiscal goals and is scheduled to meet the lender next spring for a second round of talks on a loan program. Serbia wants a credit to bolster investor confidence and doesn’t plan on drawing the funds, Dinkic said.

Serbia wants to tap a loan from Russia at the start of the second quarter and is in talks wth VTB, Russian’s second-largest lender, on selling a $250 million ruble bond, Dinkic said.

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