Government of Serbia adopts bill on confirming SACE credit arrangement agreement – Borrowing of up to EUR 200 million envisaged

At its latest session, the Government of Serbia adopted the bill on confirming the SACE agreement on the credit arrangement of up to EUR 200 million between the Republic of Serbia, represented by the Government through the Ministry of Finance as the borrower, and Deutsche Bank S.p.A. and Societe Generale as the authorized principal arrangers.

As specified, this confirms the SACE agreement on the credit arrangement that was signed on August 30, 2024.

– In line with Article 3 of the Budget Law of Serbia for 2024, borrowing from foreign investment corporations, funds and banks is approved, among other things, for the financing of the SACE Push Facility in the amount of up to EUR 200 million. With the Memorandum of Understanding, signed in Rome on March 21, 2023, between the Government of Serbia and the Italian export and credit agency SACE, owned and controlled by the Ministry of Economy and Finance of Italy, the parties have obliged to create the framework for cooperation to the end of exploring new possibilities and strengthening economic and trade cooperation between Italy and Serbia – are some of the reasons cited in the explanation of the adoption of this bill.

As pointed out, the memorandum especially focuses on the exchange of information about new business opportunities, the identifying of insurance and financial solutions of SACE for supporting Italian exports to Serbia, the organization of business and education initiatives for connecting between Italian and Serbia representatives, the provision of support to the positioning of Italian companies in Serbian supply chains etc.

– Among other things, the Memorandum envisages the securing of banking credits with SACE guarantees, which requires the signing of a credit agreement between the banking institutions and the borrower. Following the procedure of the selection of the banks, Societe Generale and Deutsche Bank, as renowned banks, offered the most favorable conditions for the financing of general budget needs of Serbia. Therefore, the SACE Push Facility envisages the securing of a SACE guarantee for the financing of the support to the general budget needs of the Republic of Serbia, which will be credited by Societe Generale and Deutsche Bank, up to the maximum amount of EUR 200 million – reads the bill.

The first step toward the implementation of this credit arrangement, as added, was realized with the signing of the Mandate Letter between Serbia and Societe Generale and Deutsche Bank S.p.A. on November 27, 2023, for the financing of the general budget needs, which also defined the framework of this financial cooperation regarding the amount of the loan, the lenders themselves, the period of the use of the funds and the repayment period, the due date, the interest rate, as well as the commitment fee, the loan terms, the documentation bank fee and the SACE guarantee fee.

The next step was realized with the signing of the Incentive Letter (Direct Agreement) on May 24, 2024 in Trieste, between Serbia and SACA, which confirms the intention to sign the SACE Push Facility and establishes the framework for cooperation and exploration of new possibilities for the strengthening of economic and trade cooperation between Italy and Serbia.

– This way, the borrower, through the competent ministries and agencies of Serbia, incites the activities of business harmonization between Italian and Serbian partners, holds periodic consultations with SACE in order to improve the outlook for the possibility of purchase from Italian companies, supports invitations to Italian companies by state companies to take part in bidding and tenders for their services/products, but also supports the possibility of business connecting between Italian companies and potential purchasers which are not from Italy – says the adopted document.

The Government’s decision of August 8, 2024, determined the Basis for Negotiations and adopted the Draft SACE Push Facility, which was then signed on August 30.

Financial terms in SACE Push Facility:

– loan amount: up to EUR 200 million of which EUR 100 million each from Deutsche Bank S.p.A. and Societe Generale;
– a variable interest rate applies, which is based on a 6M EURIBOR, augmented by the applicable fixed margin of 1.65% a year;
– one-off use of the funds is agreed, within 12 months of the signing of the SACE Push Facility;
– repayment period: nine years in 18 equal semi-annual instalments, of which the first one is due 18 months after the signing of the SACE Push Facility (each next one falls is in intervals of six months from the date of the first repayment), and the final repayment is to be made on the due date;
– due date: ten years (120 months) from the date of the signing of the SACE Push Facility;
– commitment fee: 30% of the applicable margin, calculated for the amount of unwithdrawn funds from within the credit arrangement and paid semi-annually;
– SACE guarantee fee: EUR 6.4 million in accordance with the stipulations of the SACE Guarantee.

Ministarstvo finansija Republike Srbije

Deutsche Bank AG - Repräsentanz Belgrad

Deutsche Bank S P A

Societe Generale

SACE Push Facility