Serbian eurobonds safe haven from Brexit - Bloomberg, foreign bankers recommend buying Serbian securities

Serbian government bonds have soared above those of Poland, Hungary, Croatia and Romania over the past month due to the countries`growing fears of losing billions of euros in EU funds in case the UK votes to leave the EU in the June referendum, the New York-based Bloomberg agency reports.

With Serbia`s bid to join the 28-nation bloc hanging in the air for seven years now, the country is more protected than its neighbours in terms of the fallout from a potential Brexit, Germany`s Commerzbank AG and Austria`s Raiffeisen Bank International AG estimate.

Both banks recommend buying Serbian bonds, which can benefit from government plans for economic reform, and this, in turn, creates a foundation for raising their credit rating.

Even if Britons vote on June 23 to stay in the EU, the Serbian debt will still see a benefit after last month`s electoral victory confirmed the government`s mandate to accelerate the process of EU accession by 2020, Commerzbank said in an assessment.

Serbia is in a position to lose less, says London-based Simon Quijano-Evans, the head of the bank`s emerging market research, who recommends buying Serbian bonds due in 2021, rather than Polish bonds with similar maturity dates.

Although Raiffeisen Bank is optimistic about the Serbian bonds, it believes that the country is not completely immune to a certain Brexit spillover, the report adds.

The bank's recommendation to buy three-month Serbian bonds has more to do with the outcome of last month's elections than the country's relatively smaller exposure to the effects of Brexit, says Gintaras Šlyžius, an expert of the Vienna-based bank.

Serbian Prime Minister Aleksandar Vučić's Serbian Progressive Party has promised to free the public balance sheet of the burden of losses accumulated by over 500 state-owned companies and cut the number of public sector employees, as requested in the precautionary agreement Serbia has with the International Monetary Fund, to ensure a USD 1.2 billion credit line to the country to support its government finances, the Bloomberg report said.

Bloomberg SAD

COMMERZBANK AG Frankfurt am Main

Srpska Napredna stranka - SNS

Međunarodni monetarni fond-MMF Beograd

Raiffeisen Bank International AG Wien

Eurobonds

government Eurobonds

Bloomberg

Brexit

Commerzbank AG

Raiffeisen Bank International AG

Simon Quijano-Evans

three-month bonds

Gintaras Šlyžius

Aleksandar Vučić