March 17, 2017 / 5:28 PM / 9 months ago

CORRECTED-EBRD plans another dinar bond in 2017

(Corrects figure in last para to 125)

BELGRADE, March 17 (Reuters) - The European Bank for Reconstruction and Development may tap the Serbian market later in the year with another dinar bond to boost borrowing in the domestic currency, the head of lender’s mission in Belgrade said on Friday.

The EBRD issued its first three-year, 2.5 billion dinar ($21.68 million) bond in December 2016. The maturity came with a rate of 3-month BELIBOR -- the rate on dinar deposits in the interbank market -- plus 0.4 percent.

Daniel Berg, EBRD director for Serbia, said that the bank now has two projects under way that would use money from the bond and that he hoped the first deal should be signed by the end of March.

In December, the EBRD said it hoped 15 to 20 percent of its lending to Serbia could eventually be in dinars. The bank has already issued bonds and lent in local currency in a number of countries, including Armenia, Georgia, Kazakhstan and Russia.

“What I hope ... is that those first loans will be signed ... and we’ll come back to the market for additional dinar fundraising later in the year, and I hope the next fundraising will even be at more competitive pricing,” Berg said.

“The first one (bond) is competitive enough, but I am not sure it’s going to be easy to sell that price forever.”

The EBRD has so far lent 4.5 billion euros ($4.8 billion) to Serbia where more than 70 percent of borrowing is in foreign currencies.

Berg said that the EBRD wants to boost borrowing in the dinar as unhedged borrowers in foreign currencies can be exposed to exchange rate risks.

“People have dinar incomes, dinar revenues and they are borrowing in euros ... they have a risk on their balance sheet which they are not addressing if they are borrowing in euro,” he said.

Berg also said that the EBRD was considering working with commercial banks to invest in Serbia’s energy sector including wind farms and environmental projects such as a Belgrade landfill.

“If you are financing a couple of them then you are talking about 100 to 125 million euros from the EBRD,” he said.

1 = 115.3100 Serbian dinars $1 = 0.9307 euros Reporting by Aleksandar Vasovic; Editing by Jeremy Gaunt

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