Serbia’s sovereign borrowing profile strengthened during the second quarter of 2026, with risk premiums declining further despite continued volatility across international financial markets. The country’s dollar-denominated sovereign risk premium dropped 35 basis points in Q2, reaching 123 basis points at the end of June, compared with 218 basis points for the broader emerging-market composite.
The euro-denominated premium also narrowed during the quarter, falling 16 basis points to 167 basis points. It subsequently moved modestly higher to 171 basis points in July. The shift in market pricing has also changed Serbia’s relative position within the region. Serbian sovereign debt is increasingly priced closer to investment-grade Central and Eastern European issuers than to the higher-risk Balkan sovereigns with which it had previously been more closely associated.
Debt and reserves support sovereign credit profile
Several domestic and external indicators are underpinning the improvement in Serbia’s sovereign-risk measures. Public debt stands at approximately 44.1% of GDP, while the country holds foreign-exchange reserves of €30.5 billion. The banking sector’s non-performing loan ratio remains very low, while the external account has performed better than previously expected. Together, these factors are supporting the broader improvement in investor assessment of Serbia’s credit position.
Serbia currently holds an S&P BBB- rating with a stable outlook. Fitch rates the country BB+ with a positive outlook, while Moody’s assigns a Ba2 rating with a stable outlook.
External market conditions remain a borrowing risk
The principal source of risk for Serbian sovereign financing remains external rather than a deterioration in the domestic credit fundamentals described above. A renewed energy shock could push global risk premiums higher while keeping major central-bank interest rates elevated. Such a combination would increase Serbia’s borrowing costs even if domestic economic and fiscal conditions remained unchanged. Serbian sovereign debt is consequently being shaped by two market forces: continued credit convergence toward investment-grade positioning and exposure to global movements in interest rates, duration and investor risk appetite.
