11/02/2021

Serbia in eminent company – dinar bonds included in renowned J.P. Morgan index family

One of the leading financial institutions in the world, J.P. Morgan announced today its decision to include Serbia’s dinar-denominated bonds in its renowned GBI-EM family of indices as of 30 June 2021. This decision is the accomplishment of the aim that Serbia aspired to and strongly supported since 2015, and is another recognition of the results achieved in developing the domestic economy, improving the financial market, and particularly in ensuring the stability of the dinar, as the pillar and anchor of overall macroeconomic stability.
 
Serbia’s dinar bonds will be included in the GBI-EM Global Diversified index, which is one of the most frequently watched indices by international investors, i.e. one of the benchmark indices of bonds issued in local currencies of emerging economies. These bonds will also be included in GBI-Aggregate (GBI-AGG) and GBI-AGG Diversified indices, which cover government bonds in domestic currencies of both advanced and emerging economies.

“Success is never accidental and does not come overnight, but is the result of committed work, dedication and improvement of the domestic economy and the financial market as a whole. When in 2015 we began with our activities to include Serbian dinar bonds in the J.P. Morgan index, few people believed that this would really happen. We managed to overcome all obstacles and we have been justly included in the company of those emerging economies that are “on the radar” of international investors every day. This is the result of a large number of meetings that we had with this institution in the past six years, and of direct contacts and talks of J.P. Morgan with independent credible participants in Serbia’s social life and in the domestic financial market, which helped J.P. Morgan to obtain an objective and integral picture about our country. With the inclusion of our bonds in this index, Serbia will become an even more attractive investment destination and will be on the map of the most eminent world investors. Now we rightly expect the continuation of a significant inflow of investment in our country, which will give a direct boost to faster economic growth”, stated NBS Governor Jorgovanka Tabaković.

In its report, J.P. Morgan particularly highlights the improved liquidity of the dinar bond market, which indicates how much the interest of foreign investors in Serbian securities has increased in recent years. While heightened coronavirus-related market volatility over the past year impacted negatively overall liquidity in the financial markets of emerging economies, international investors agree that liquidity in Serbian dinar government bonds has returned to pre-pandemic levels.

“Today’s announcement is a strong signal to international investors that Serbia has reached the level of reputable developing countries. This will have multiple positive effects on the domestic financial market and enable even more favourable financing conditions for the government and local companies. We expect to see further diversification of the already broad base of investors in Serbian securities, as the inclusion of dinar bonds in the said index significantly improves the attractiveness of our country as an investment destination”, stressed Governor Tabaković.
 
The report also states that over the years, Serbia has focused on a benchmark building programme and increasing the size of individual dinar instruments, aiding overall liquidity in the local financial market.

“J.P. Morgan’s decision comes as a huge recognition of all our efforts over the previous years, focused on developing the domestic financial market and maintaining stability of the local currency – our dinar. The fact that dinar bonds were on Index Watch for the past year, when the world economy faced major challenges, and the fact that a positive decision was made – the decision to include dinar bonds in the J.P. Morgan GBI-EM index, show that we managed to maintain the resilience and stability of the local financial market despite enormous challenges”, concluded Governor Tabaković.

The above indices will include three benchmark issues of dinar bonds, with original maturity of 7, 10 and 12.5 years, maturing in 2026, 2028 and 2032.

 

Governor's Office