december 2015 monthly update - javnidug.gov.rs update for investors/2015/republic... · december...

December 2015

Monthly Update

Politics European Council President Donald Tusk visited Belgrade to discuss the refugee and migrant crisis with Serbian Prime Minister

Aleksandar Vucic.

After opening Chapters 32 and 35, Serbia is best prepared for Chapters 23 and 24 dealing with the rule of law, which should be

opened at the start of the following year, Serbia's chief negotiator with the EU Tanja Miscevic said.

The next high-level round of Belgrade-Pristina dialogue in Brussels can be expected in early 2016, EU spokesperson says.

Serbia has achieved much in the EU integration process over the past year, Head of the EU Delegation to Serbia Michael Davenport

said, underlining the importance of going on with reforms.

Fiscal Sector

In November 2015, public debt of the Republic of Serbia changed from RSD 2,937.9bn (EUR 24.3bn) at the end of October 2015, to

RSD 2,994.1bn (EUR 24.7bn) at the end of November 2015. Central Government public debt to GDP (ESA 2010 methodology) ratio

was at the level of 75.5% at the end of November 2015. The major share of public debt is still in foreign currency out of which in

EUR is 39.4%, USD 33.9%, RSD 21.5%, SDR 4.0%, CHF 0.6% and other 0.5% (GBP, JPY, DKK, SEC, NOK). Up to the end of

November 2015, Public Debt Administration of the Republic of Serbia managed to meet its obligations which amounted to RSD

591.8bn (EUR 4.9bn), out of which principal payments amounted to RSD 474.3bn (EUR 3.9bn), while interest and other costs were

RSD 117.5bn (EUR 1.0bn). Vast majority of items repaid up to the end of November 2015, belong to government securities issued on

domestic market RSD 402,4bn (EUR 3.3bn) out of which principal payments were RSD 342.5bn1 (EUR 2.8bn) and interest payments

were RSD 59.9bn2 (EUR 494mln). Obligations in respect of foreign creditors were repaid in amount of RSD 87.5bn (EUR 722.0mln),

out of which principal RSD 37.7bn (EUR 311mln). Payments in respect of guarantees issued by the Government were RSD 43.1bn

(EUR 355mln) out of which principal RSD 36.5bn (EUR 301mln), while interest were RSD 6.6bn (EUR 54mln). In the first eleven

months of 2015, PDA received RSD 463.5bn (EUR 3.82bn) from domestic market out of which government securities issued in

domestic currency amounted to RSD 340.1bn (EUR 2.80bn) while receiving from EUR denominated government securities was RSD

123.4bn (EUR 1.02bn). Total receiving at the end of November 2015, amounted to RSD 485.5bn (EUR 4.00bn).

Serbia posted a general government deficit of RSD 65.2 billion in period January-November 2015. At the general government level,

revenues were at RSD 1.52 trillion and outlays at RSD 1.59 trillion. The result on the revenue side was better than planned mainly as a

result of payments of dividends and profit portions by public companies, according to the ministry’s data. On the spending side,

capital outlays fell short of the target, as did severance payments for employees of companies under restructuring. The state budget

deficit stood at 1% of GDP in period January-November 2015.

Economy

Fitch Ratings has revised Serbia’s outlook to positive from stable and affirmed its long-term foreign and local currency issuer default

ratings at “B+”.

Economy Minister Zeljko Sertic has said that the government plans to impose tight control on public companies’ operations as of

2016 and to introduce corporate management modelled after the private sector.

Telekom Srbija plans to invest about EUR 21 million in its mobile network in 2016.

The European Bank for Reconstruction and Development (EBRD) and the City of Kragujevac have signed a senior loan agreement of

up to EUR 15 million for improving the transportation infrastructure, waste collection services, and public transportation in the

central Serbian city.

Sections of a 23-kilometer stretch of the Corridor 10 highway in the east of Serbia were opened in the presence of Prime Minister

Aleksandar Vucic, transportation minister Zorana Mihajlovic, and other officials.

Serbia aims to lower its unemployment rate to below 15% over the next two years, National Employment Service Director said.

Slovakia is interested in further enhancing economic cooperation with Serbia, which could include joint activities in third markets and

the privatization of certain Serbian companies, Slovak Deputy Prime Minister Lubomir Vazny said.

Foreign Direct Investments

Global supplier of vehicle technology Delphi yesterday signed an agreement with Serbian privately-owned agribusiness Matijevic to

lease its bus maker Neobus’ 18,000-square meter facility in Novi Sad’s industrial zone, where it intends to launch export-oriented auto

parts production.

South Korean auto parts producer Yura Corporation will start building new factory in Leskovac next year, which will initially hire 700

people, Leskovac’s mayor said.

Spanish composite components maker Refisa plans to launch the production of components for trains on the grounds of Serbian truck

maker FAP in Priboj.

IGB Automotive Comp will invest at least EUR 4.5 million to expand its production facility in the Vojvodina town of Indjija, which

will create more than 500 jobs over the next five years.

Italian steel structures manufacturer Tecnostrutture’s Belgrade subsidiary has started building a production facility in Zrenjanin’s

industrial zone Jugoistok, in an investment worth EUR 3.5 million.

Recycler Greentech has opened another recycling facility at its existing plant in Mladenovo, near Vojvodina’s Backa Palanka, hiring

100 people.

1 Repayments based on Frozen Foreign Currency Bonds are not included in this amount

2 The difference between nominal value and discounted value is included in this amount

December 2015

Source: Statistical Office of the Republic of Serbia; National Bank of Serbia; Bloomberg; Ministry of Finance and Economy * Estimated value; **According to NBS methodology Foreign Debt consist of Public and Private sector debt; *** According to methodological concept of IMF and EU “BPM6” applicable from April

2014; Ɨ General Government;

Macroeconomic Data Real GDP growth %

Industrial

production

Nov15/ Nov14

in %

CPI Current acc.

Balance***

Government bonds on international

market YTM as of 30st November

Currency

units/USD

Currency

units/EUR

2013 2014* 2015* Nov'15/

Oct’15

in %

Nov’15/

Nov’14

in %

Oct last12

months

mlnEUR

% of

GDP

Serbia

2017

Serbia

2018

Serbia

2020

Serbia

2021

30 Nov

2015

30 Nov

2014

30 Nov

2015

30 Nov

2014

2.6 -1.8 0.8 11.7 -0.1 1.3 -1,721.3 -5.2 3.019% 3.660% 4.026% 4.402% 114.5449 96.8325 121.2458 120.5468

* Estimated value

• According to data of the Serbia n Statistical Office, consumer prices fell by 0.1% in November, mainly reflecting

the seasonal drop in prices of fresh fruits and meat, and a further decline in prices of petroleum products. Y -o-y

inflation equalled 1.3% in November, which is below the low er bound of the target tolerance band (target:

4±1.5%). Under the NBS central projection, y -o-y inflation will return within the target band in the second half of

2016.

• The overall external trade in the Republic of Serbia for the period January - November 2015 amounted to:

- USD 28908.0 million - which was a decrease of 11.1% compared to the same period 2014;

- EUR 25960.8 million - which was an increase of 6.9% compared to the same period 2014.

The value of exports amounted to USD 12308.5 million, which was 9.9% decrease when compared to the same period last year, while

the value of imports amounted to USD 16599.5 million, which was 12.0% decrease relative to the same period last year. Decrease of

exports and imports, as well as of the overall external trade, expressed in USD, has been caused by USD currency strengthening relative

to RSD and also to EUR. Expressed in Euros, the value of exports amounted to EUR 11055.5 million, which was the increase of 8.4%,

compared to the same period last year. The value of imports amounted to EUR 14905.3 million, which was 5.8% increase when

compared to the same period last year. The deficit amounted to USD 4290.9 million, which was a decrease of 17.4% in relation to the

same period last year. The deficit expressed in Euros amounted to 3849.9 million, which was a decrease of 0.8% compared to the same

period last year. The export - import ratio equaled 74.1% and was higher if compared to the same period last year when it was 72.4%.

Expressed in EUR, the value of exports amounted to EUR 999.6 million, which was an increase of 8.8%, compared to the same month

last year. The value of imports amounted to EUR 1360.0 million, which was 9.7% increase when compared to the same month last year.

Source: Belgrade Stock Exchange

-1,8%

1,7%

-6,6%

17,3%

77,3%

Real GDP growth (%)

YoY inflation rate December (%)

Ɨ Budget deficit (% GDP)

Unemployment rate Q4 2014

**Foreign Debt as of December

2014 (% GDP)

2014

0,8%

1,3%

-4,1%

16,7%

80,0%

*Real GDP growth for 2015 (%)

YoY inflation rate November (%)

*Ɨ Budget deficit (% GDP)

Unemployment rate Q3 2015

**Foreign Debt as of September

2015 (% GDP)

2015

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

% Belgrade OverNight Index Average

250

450

650

850

1.050

1.250

1.450

1.650Belgrade Stock Exchange Indices

Belex 15 index Belex line index

December 2015

Currency, Interest Rates and FDI

Key Policy Rates of National Bank of Serbia Current value Last change Date of last meeting Next board meeting

Key policy rate - 2w repo 4.50%

0.00% 10.12.2015 12.01.2016 Deposit facility interest rate 2.50%

Lending facility interest rate 6.50%

Source: National bank of Serbia

Source: National bank of Serbia

• Rising by EUR 71.7 mln from a month earlier, the stock of NBS FX reserves amounted to EUR 10,7 46.0 mln at

end-November, covering 277% of money supply M1 or around seven months’ worth of imports of goods and

services. Much of the inflow came from the sale of euro -denominated government securities in the domestic

financial market (EUR 121.4 mln) and the disbursement of loans worth EUR 108.4 mln. Other inflows amounted to

EUR 48.8 mln. Major outflows from FX reserves were registered on account of redemption of maturing euro -

denominated government securities (EUR 142.3 mln), government debt servicing (E UR 52.0 mln), and banks’

withdrawal of FX required reserves (EUR 98.4 mln, net). Other outflows equalled EUR 37.0 mln, net. Net FX

reserves, defined as FX reserves less banks’ FX required reserves and drawings under the arrangement with the

IMF concluded in 2009, came at EUR 8,876.0 mln. Trading volumes in the IFEM reached EUR 545.8 mln, down by

EUR 40.2 mln from the month before. In the first eleven months of 2015, interbank trading volumes totalled EUR

7,077 mln. The dinar depreciated against the euro by 0.4% in nominal terms in November. The NBS intervened in

the IFEM by buying EUR 10 mln and selling EUR 10 mln in order to ease excessive daily volatility of the

exchange rate.

• The industrial production in the Republic of Serbia in November 2015, when compared to November 2014, increased by 11.7% and in

relation to 2014 average, it increased by 16.6%. Industrial production in the period January- November 2015 increased by 7.9% relative

to the same period 2014.

23456789

101112

% National Bank of Serbia Interest Rates

Key policy rate - 2w repo Deposit facility interest rate

Lending facility interest rate

90

95

100

105

110

115

120

125

In RSD Exchange Rates

EUR/RSD USD/RSD

December 2015

In EUR million

Source: National bank of Serbia; *FDI value has been presented in compliance with the Sixth Edition of the Balance of Payments and International

Investment Position Manual, International Monetary Fund, 2009 (BPM6) from the end of 2013. Public Debt Report

Public Debt Stock and Structure as of 30st November 2015:

EUR USD RSD GDP%

Direct Liabilities (A)

Internal Debt 8,732,882,049 9,243,757,429 1,058,825,270,310 26.7%

External Debt 13,517,742,297 14,308,532,977 1,638,969,478,985 41.3%

Direct Liabilities in Total 22,250,624,346 23,552,290,406 2,697,794,749,295 68.1%

Indirect Liabilities (B)

Internal Debt 637,621,403 674,922,386 77,308,917,158 2.0%

External Debt 1,806,278,089 1,911,945,725 219,003,631,926 5.5%

Indirect Liabilities in Total 2,443,899,492 2,586,868,111 296,312,549,084 7.5%

Non-Guaranteed Local Government Debt (C)

Internal Debt 287,551,947 304,373,795 34,864,465,913 0.9%

External Debt 135,459,969 143,384,405 16,423,952,288 0.4%

Non-Guaranteed Local Government Debt in Total 423,011,916 447,758,200 51,288,418,202 1.3%

Central Government Public Debt (A+B) 24,694,523,838 26,139,158,517 2,994,107,298,379 75.5%

General Government Public Debt (A+B+C) 25,117,535,754 26,586,916,716 3,045,395,716,581 76.8%

In EUR million

Date Internal Debt External Debt Monthly Change of

Public Debt Direct Liabilities Indirect Liabilities Direct Liabilities Indirect Liabilities

31/12/2014 104.2 58.3 318.4 -5.7 475.3

31/01/2015 -116.0 0.9 557.8 14.3 457.1

28/02/2015 450.5 -18.8 80.6 6.5 518.8

31/03/2015 176.0 -1.7 275.6 5.4 455.3

30/04/2015 -26.2 -9.0 -125.6 -1.9 -162.8

31/05/2015 -121.4 -0.5 169.0 13.4 60.5

30/06/2015 -173.4 23.2 -148.6 -16.3 -315.1

31/07/2015 50.7 -12.5 225.9 -12.6 251.4

31/08/2015 -26.9 -13.9 -139.6 -9.0 -189.4

30/09/2015 248.1 -15.5 -1.1 -5.6 225.9

31/10/2015 125.6 -12.9 192.2 -42.0 262.9

30/11/2015 125.6 -12.9 194.1 -42.0 264.8

2.486 2.068 1.133 3.320

753

1.298 1.236

1.446

7,4% 6,7%

3,8%

9,9%

2,4%

3,8% 3,7% 4,4%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

0

500

1.000

1.500

2.000

2.500

3.000

3.500

2008 2009 2010 2011 2012 2013* 2014* Jan-Oct

2015

Foreign Direct Investment in Serbia in period 2008 - October 2015

FDI (net), EUR million FDI (net), %GDP

DYNAMICS OF PUBLIC DEBT

December 2015

In EUR million

Source: Public Debt Administration

INTERNAL DEBT ANALYSIS EXTERNAL DEBT ANALYSIS



21.500

22.000

22.500

23.000

23.500

24.000

24.500

25.000

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

20.000

22.000

24.000

26.000In

EU

R m

illi

on

Public Debt Stock and Structure

Internal debt - direct liabilities Internal debt - indirect liabilitiesExternal debt - direct liabilities External debt - indirect liabilitiesCentral Government Public Debt (right axis)

37.9%

37,5%

38,0%

38,5%

39,0%

39,5%

Internal public debt/total public debt ratio

62.1%

59,5%

60,0%

60,5%

61,0%

61,5%

62,0%

62,5%External public debt/total public debt ratio

8,733

638

600

620

640

660

680

700

720

7.600

7.800

8.000

8.200

8.400

8.600

8.800

9.000

In E

UR

mil

lio

n

Internal Public Debt Structure

Direct liabilities Indirect liabilities

13.518

1.806

1.775

1.800

1.825

1.850

1.875

1.900

10.500

11.000

11.500

12.000

12.500

13.000

13.500

14.000

14.500

In E

UR

mil

liio

n

External Public Debt Structure

Direct liabilities Indirect liabilities

December 2015


Government Securities DOMESTIC MARKET OVERVIEW


EUROBOND OVERVIEW

56.7%

41.4%

1,9%

Internal Debt Currency Structure as of

30 November, 2015

RSD EUR USD

38.2%

53.5%

1.0%

6.4% 0.8%

External Public Debt Currency Structure as

of 30 November, 2015

EUR USD CHF SDR Other

2.94%

4.09%

4.09%

4.95%

6.59%

6.50%

10.75%

12.99%

2,5%

4,5%

6,5%

8,5%

10,5%

12,5%

14,5%

3M 6M 53W 2Y 3Y 5Y 7Y 10Y

Last Primary Auction Accepted Rate

2.97%

4.62% 6.34%

8.39%

9.90% 10.60% 12.03%

12.99%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

3M 6M 53W 2Y 3Y 5Y 7Y 10Y

Average Accepted Rates at Primary Auction

Republic of Serbia Eurobond 2021 - Price/Yield

Date Closing

price

YTM Monthly price

change %

Monthly yield

change %

30/11/15 114.48 4.402 -0.2% 0.0%

31/10/15 114.67 4.400 2.0% -9.0%

30/09/15 112.44 4.834 -0.5% 1.6%

31/08/15 113.00 4.758 0.1% -1.1%

31/07/15 112.84 4.811 0.4% -2.2%

30/06/15 112.38 4.919 -2.5% 10.3%

31/05/15 115.22 4.460 -0.2% 0.1%

30/04/15 115.41 4.455 -0.1% -0.3%

31/03/15 115.53 4.467 -1.5% 6.3%

28/02/15 117.34 4.201 2.2% -9.5%

31/01/15 114.77 4.643 2.1% -8.0%

31/12/14 112.41 5.049 -2.2% 8.1%

Republic of Serbia Eurobond 2021 - Tap

Issuer: Ministry of Finance of the Republic of Serbia

Ratings: BB- (S&P); BB- (Fitch)

Maturity: 28.09.2021

Coupon: 7.25% semi-annual

*Size: USD 2.0bn

**Re-offer yield: 6.625%

Re-offer price: 104.179

Spread to US Treasury Benchmark: 497.0 bps

Announcement date: 27.09.2012

Listing: London Stock Exchange

*Primary auction USD 1,0bn 21.09.2011.; Tap Issuance 27.09.2012. USD 1,0bn. **Tap Issuance re-offer yield.

December 2015

Republic of Serbia Eurobond 2017





Size: USD 750.0mln

Re-offer yield: 5.450%





Source: Bloomberg

4,00

4,40

4,80

5,20

5,60

6,00

6,40

6,80

7,20

7,60

8,00

96 $

98 $

100 $

102 $

104 $

106 $

108 $

110 $

112 $

114 $

116 $

118 $

120 $

In %

Price/YTM Graph - Serbia Eurobond 2021

Closing price YTM

170 bps

200 bps

230 bps

260 bps

290 bps

320 bps

350 bps

380 bps

410 bps

440 bps

470 bps

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

In %

YTM US Dollar Interest Rate Swap - 6Y

Spread to benchmark Spread to US Dollar Interest swap rate


Date Closing

price

YTM Monthly price

change %

Monthly yield

change %

30/11/15 104.23 3.019 -0.2% 1.5%

31/10/15 104.49 2.973 0.7% -12.8%

30/09/15 103.76 3.408 -0.2% 0.3%

31/08/15 103.92 3.397 0.1% -3.4%

31/07/15 103.79 3.515 0.1% -3.2%

30/06/15 103.66 3.631 -0.3% 2.0%

31/05/15 103.96 3.561 0.3% -5.1%

30/04/15 103.60 3.753 -0.4% 3.2%

31/03/15 104.02 3.637 -0.9% 9.4%

28/02/15 104.96 3.325 1.2% -13.3%

31/01/15 103.72 3.834 1.0% -10.0%

31/12/14 102.65 4.261 -1.8% 17.0%

December 2015

Source: Bloomberg

2,80

3,10

3,40

3,70

4,00

4,30

4,60

4,90

5,20

5,50

5,80

6,10

6,40

95,0 $

96,0 $

97,0 $

98,0 $

99,0 $

100,0 $

101,0 $

102,0 $

103,0 $

104,0 $

105,0 $

106,0 $

107,0 $

108,0 $

In %


Closing price YTM

200 bps

220 bps

240 bps

260 bps

280 bps

300 bps

320 bps

340 bps

360 bps

380 bps

400 bps

420 bps

440 bps

460 bps

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

6,5

7,0

In %








Size: USD 1.5bn







Date Closing

price

YTM Monthly price

change %

Monthly yield

change %

30/11/15 103.27 4.026 -0.2% 0.8%

31/10/15 103.46 3.993 2.0% -11.5%

30/09/15 101.42 4.513 0.0% -0.1%

31/08/15 101.43 4.518 0.1% -0.6%

31/07/15 101.34 4.545 0.0% -0.3%

30/06/15 101.30 4.560 -1.7% 9.8%

31/05/15 103.07 4.153 0.1% -1.0%

30/04/15 102.92 4.196 -0.1% 0.1%

31/03/15 102.99 4.192 -1.5% 8.4%

28/02/15 104.52 3.867 1.9% -10.3%

31/01/15 102.54 4.311 2.3% -10.8%

31/12/14 100.19 4.832 -2.3% 11.9%

December 2015

Source: Bloomberg


Date Closing

price

YTM Monthly price

change %

Monthly yield

change %

30/11/15 106.25 3.660 -0.1% -0.4%

31/10/15 106.35 3.675 1.2% -11.1%

30/09/15 105.11 4.135 -0.5% 3.1%

31/08/15 105.62 4.012 0.1% -2.1%

31/07/15 105.48 4.096 -0.1% -0.6%

30/06/15 105.54 4.120 -0.7% 4.7%

31/05/15 106.30 3.934 0.3% -3.2%

30/04/15 105.98 4.063 -0.2% 0.6%

31/03/15 106.20 4.039 -1.7% 13.2%

28/02/15 108.03 3.568 1.9% -14.2%

31/01/15 106.02 4.157 1.4% -9.1%

31/12/14 104.61 4.574 -1.8% 11.4%

3,00

3,50

4,00

4,50

5,00

5,50

6,00

6,50

7,00

89,0 $

91,0 $

93,0 $

95,0 $

97,0 $

99,0 $

101,0 $

103,0 $

105,0 $

107,0 $

In %


Closing price YTM

200 bps

220 bps

240 bps

260 bps

280 bps

300 bps

320 bps

340 bps

360 bps

380 bps

400 bps

420 bps

440 bps

460 bps

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

6,5

7,0In

%





Ratings: BB- (S&P); BB- (Fitch); B1(Moody’s)


Coupon: 5.875 % semi-annual

Size: USD 1.0bn






December 2015

Spread to Benchmark Spread to US Dollar Swap Interest rate

Source: Bloomberg

Amortizing bond - London Club 2024

Date Closing price YTM Monthly price change % Monthly yield change %

10/1/2004 11/1/2024 1,080,000,000 972,000,190 6.75%

Closing price and YTM

Date Closing price YTM Monthly price change % Monthly yield change %

30/11/15 102.39 6.394 0.2% -0.4%

31/10/15 102.21 6.422 0.1% -0.4%

30/09/15 102.06 6.446 0.3% -0.7%

31/08/15 101.75 6.492 0.0% 0.0%

31/07/15 101.78 6.489 -0.2% 0.5%

30/06/15 102.01 6.459 -0.2% 0.5%

31/05/15 102.22 6.430 0.1% -0.3%

30/04/15 102.12 6.448 -0.1% 0.3%

31/03/15 102.25 6.431 -0.2% 0.5%

28/02/15 102.49 6.398 0.6% -1.4%

31/01/15 101.85 6.488 0.7% -1.5%

31/12/14 101.14 6.589 -0.5% 1.1%

0,00

1,00

2,00

3,00

4,00

5,00

6,00

96,0 $

98,0 $

100,0 $

102,0 $

104,0 $

106,0 $

108,0 $

110,0 $

In %


Closing price YTM

180 bps

200 bps

220 bps

240 bps

260 bps

280 bps

300 bps

320 bps

340 bps

360 bps

380 bps

400 bps

420 bps

440 bps

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

In %


December 2015


Source: Bloomberg

6,30

6,40

6,50

6,60

6,70

6,80

6,90

7,00

7,10

7,20

7,30

7,40

7,50

94,0 $

95,0 $

96,0 $

97,0 $

98,0 $

99,0 $

100,0 $

101,0 $

102,0 $

103,0 $

In %

Price/YTM Graph Amortizing Bond - Serbia London Club 2024

Closing price YTM

375 bps

400 bps

425 bps

450 bps

475 bps

500 bps

525 bps

550 bps

575 bps

600 bps

625 bps

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

5,5

6,0

6,5

7,0

7,5

8,0In

%


december 2015 monthly update - javnidug.gov.rs update for investors/2015/republic... · december...

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