State to Borrow EUR 300 Million for Construction of Roads, Railroads and Procurement of Gas and Electricity

The Government of Serbia has adopted the Bill on Confirming the Loan Agreement worth EUR 300 million between the Republic of Serbia, represented by the Government of Serbia and acting through the Ministry of Finance, Merrill Lynch International, as the arranger, and several financial institutions, as the primary lenders, and Global Loan Agency Services Limited, as the agent.

The credit is approved in two tranches, one in the amount of EUR 130 million with a fixed interest rate and one in the amount of EUR 170 million with a variable interest rate.

The proceeds of this loan will be used, as said, for the financing of support to the state budget. The amounts borrowed within the tranche with a fixed interest rate will be used by the state, among other things, for the financing of the Ruma-Sabac-Loznica road, the project of the construction of the Backi Breg-Kikinda railroad, as well as the expansion of the capacities of the Port of Sremska Mitrovica, the Port of Bogojevo and the Port of Prahovo.

It is also planned for the money to be used for the reconstruction and construction of public-purpose facilities in the fields of healthcare, education and science, sports infrastructure, welfare protection, culture and local utility infrastructure.

The fixed interest rate will be set as a five-year euro-denominated interest swap rate calculated using the EUSA5 function on the Bloomberg page, at 10 AM, on the date which is two work days before the date of the loan agreement and amounts to 3.1350%.

The state plans, as the bill says, to use the proceeds within the tranche with a variable interest rate, among other things, for the financing of state subsidies for the procurement of natural gas (not counting and excluding gas from the Russian Federation or any country under sanctions) by Srbijagas and for the procurement of electrical energy by Elektroprivreda Srbije (EPS).

The variable rate is based on the six-month EURIBOR or some other rate set as the benchmark swap rate, increased by a fixed margin of 4.20% a year.

The credit will be paid out in 11 equal semi-year installments, whereby the first repayment date will be 24 months from the date of the utilization of the funds, whereas the final repayment date will be 84 months from the date of the utilization of the funds.

The primary lenders are: Merrill Lynch International, Erste Group Bank AG, Alpha Bank S.A, Luxembourg Branch, Bank of America, N.A., acting through its London Branch, VTT Fund Limited, Raiffeisen Bank International AG, Vega Total Return Fund Limited and Atlantic Forfaitierungs AG.

I. Z.

Vlada Republike Srbije

JP Srbijagas Novi Sad

Ministarstvo finansija Republike Srbije

Merill Lynch International

Global Loan Agency Servicies Limited

Erste Group Bank AG

Alpha Bank SA

Luxembourg Branch

Bank of America NA acting through its London Branch

VTT Fund Limited

Raiffeisen Bank International AG

Vega Total Return Fund Limited

Atlantic Forfaitierungs AG

loan

credit

construction of Ruma Šabac Loznica road

construction of Bački Breg Kikinda fast railroad