S&P has upgraded Serbia’s long-term sovereign rating from BB+ to BBB-, which removes its foreign currency bonds from junk status and puts them in the investment grade category, Bloomberg reports citing a statement from the agency.
The rating outlook is stable. Thus, the rating company now assesses Serbia’s creditworthiness on a par with Hungary and Romania and one notch below Mexico. The country’s speculative rating remains at Fitch Ratings and Moody’s Ratings.
“The rating upgrade reflects Serbia’s increasing resilience to shocks thanks to effective macroeconomic management, which we expect to continue in the coming years,” S&P said in a statement.
It emphasizes that robust domestic demand, accumulated reserves, and prudent fiscal and monetary policies, supported by cooperation with the IMF, allow Serbia to withstand economic difficulties and future potential shocks.
S&P changed its outlook on Serbia’s credit rating to positive in April 2024, and Fitch and Moody’s followed suit in August, raising the possibility that the country will soon receive an investment grade rating from the three global rating agencies, according to Bloomberg. Serbia became the first country in the Western Balkans to receive an investment grade rating and the only EU candidate country with such a rating. Yields on Serbia’s 2034 dollar-denominated bonds fell 70 basis points from their June peak to 5.63% as of Friday, October 4.
Since June, Serbia’s bonds have posted a 7% return, outperforming the Bloomberg EM Hard Currency Index, which was up 5.8%. Some investors, such as Morgan Stanley Investment Management, have long believed that Serbia deserves a rating upgrade, the agency notes.
