February 12 (SeeNews) - Serbia's finance ministry has signed a memorandum of understanding with securities transactions settlement bank Euroclear to establish the appropriate market conditions for efficient local currency (LCY) sovereign debt issuance, Euroclear said on Wednesday.
The intention is for Serbia to eventually create a Euroclearable link, which will facilitate international investment into the Serbian bond market, Euroclear said in a statement.
"This partnership is an important piece in our overall strategy to drive down the cost and increase demand for our sovereign debt, grow and diversify the international investor base, improve preconditions necessary for further capital market development in the Republic of Serbia, and ultimately secure an investment-grade rating in the near term," finance minister Sinisa Mali said in the statement.
Achieving Euroclearability helps to facilitate access of foreign investors into the domestic market in a more secure and standardised way which will result in an increase in capital, higher trading volumes and lower yields in secondary markets. This, in turn, can drive further capital market efficiencies including a possible credit rating upgrade and inclusion in various bond indices, Euroclear said.
"Our goal is to support the long term objective of the Serbian market of increasing liquidity, diversifying the international investor base and strengthening the local sovereign debt market," Euroclear head of global capital markets Sudip Chatterjee commented.
In December, Mali said that the country plans to borrow 2 billion euro ($2.2 billion) through the sale of government securities on international markets in 2020. The borrowing through the issuance of domestic government debt is planned at about 312 billion dinars ($2.9 billion/2.7 billion euro).
($ = 0.916097 euro)