The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

How distressed is Serbian debt?

Serbian debt is undergoing something of a rally. The restructuring of the country's $2.4 billion in London Club debt seems finally to be gathering momentum, and analysts are calling it the next big CEE convergence trade. But are they getting over-excited? The Serbian minister of finance thinks so.

Djelic: sceptical that the rally in Serbian debt prices is based on fundamentals

THE STORY OF Serbian debt is complicated. In fact, as Jerome Booth, head of research at Ashmore Investment Management, says: "It's the most complicated instrument in emerging markets." The first complication, is that it was originally Yugoslav debt.


The other countries that were formally parts of Yugoslavia have all completed their own restructurings, leaving around $2.4 billion in principal and past deferred interest (PDI), as well as the precedents of what sort of deals they struck. Another complication is that the other countries paid back principal but ignored PDI, quite legally under the contract of the original debt. This means that Serbia has less principal remaining than the IMF originally decreed, but more PDI.

A third complication is the form the debt takes. Around $330 million is in two obscure structures called trade deposit facility agreements and alternative participation agreements. These aren't liquid, and for the purpose of this article we can ignore them. The slightly more liquid debt is the $2.4


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree