The National Bank of Serbia (NBS) told N1 the amount it paid for Telkom Srbija bonds was closer to a third of the issue, that they were repurchased entirely under market conditions, and issued in Dinars, not Euro.
In its response to N1’s query, the Bank says the „motives for publishing was in the fact that in the previous period, the Bank contributed to favourable conditions for issuing corporate liabilities by maintaining monetary and financial stability, even during the unprecedented global economic crisis.“
„This was very efficiently used by the largest telecommunications company in Serbia to realise its first-ever issue of corporate bonds following all regulations. That is also an excellent example of the successful start in implementing the measure adopted by the NBS in mid-May, to include corporate bonds of domestic companies in monetary operations, thus achieving two goals: support for faster recovery of the domestic corporate sector from the negative economic consequences of the coronavirus crisis, i.e., faster economic growth, and give an initial impetus for the development of this segment of the capital market,“ the NBS reply read.
Besides, the Bank says „Telekom Srbija has recognised the importance and benefits of financing through corporate bonds, which allows flexibility of periodic cash flows during the period to maturity of the bond and used the favourable moment and stable environment to achieve several other goals – the ability to use funds to finance business needs, but also to refinance part of the existing credit obligations.“
„The fact that corporate bonds were issued in Dinars shows the inaccuracy of some media’s allegations that this is a transaction in foreign currency (Euro) and that the NBS’s foreign exchange reserves are used to support this monetary instrument. Only someone who is either not professional enough, or not familiar with the transaction, or in both cases an insufficiently competent ‘advisor without liability,’ could make such statements,“ the Bank said.
N1 reported news about the NBS’ purchasing Telkom’s bonds using both currencies, under the NBS daily exchange rate for the Euro equivalent for the Dinar amount. N1 never claimed the transactions were in Euro or any other foreign currency, let alone implied anything about the use of the foreign currency reserves.
The NBS also said that it didn’t initiate a transaction of purchase or sale of these securities.
„The Bank decides to make the offer to the banks after the issue of corporate bonds, if the banks, which have invested in the primary market in these bonds, want to use part of them for monetary operations with the NBS (purchase transactions, use as financial collateral in repo transactions and/or for the withdrawal of short-term or overnight loans),
It added that „following the above, and taking into account that corporate bonds issued by Telekom Srbija meet all the criteria set by NBS regulations, as well as that the investors offered to sell a smaller part of these bonds to the NBS, a successful realisation of these monetary measures have taken place.“
„Articles and claims in some media in which, based on unverified and semi-information, there was speculation about the amount of purchase of these securities by the NBS – are completely incorrect… When someone puts an incorrect number in the headline and the news without prior verification, they have lost the entire credibility with readers. The NBS did not buy 100 million Euros of Telekom’s corporate bonds, because these bonds are in Dinars. Therefore, foreign currency (Euros) cannot be used in these transactions. This is important because it can be wrongly related to the country’s foreign exchange reserves, which the NBS manages responsibly and prudently, investing them in maintaining the country’s financial stability, which it increased in the previous period of two and a half years to an extremely high amount of over 5, 3 billion Euro. Therefore, there are no foreign exchange transactions, nor the use of foreign exchange reserves for the mentioned purposes.“ NBS said in its reply to N1.
It adds that „the total amount of repurchased securities is closer to one third than, as incorrectly reported, a half of the issue and they are repurchased under market conditions (i.e., at a rate almost identical to the coupon interest rate, i.e., the rate at which these securities are issued).“
NBS says some banks have already informed it they want to buy a part of the securities currently in the NBS portfolio, due to their and clients’ needs and orders. That confirms the level of interest in these bonds and trust in the company’s business.“
„In line with its programme and regulations, the NBS will consider them with due care and respond to them after being officially informed by the banks’ requests,“ The Bank’s reply said.