Serbia and the mystery of the 747s 

Instincts confirmed 

Although Serbia was still poor, it had made significant progress in the decade since the end of the Yugoslav wars and the lifting of sanctions. It was the most industrialized of the former Yugoslav countries and had productive agricultural land. Unlike peers such as Slovenia and Belarus–which had been quick to affiliate closely with the European Union and Russia respectively–Serbia was largely unaligned. So, for foreign powers, the race was now on to form trade relationships.

Peter’s instinct to ask about the two 747’s proved to be valuable. His finance ministry contacts confirmed that there were two high-level delegations in town. A team representing Turkish President Recep Tayyip Erdogan was exploring investments including real estate and productive capacity. The Abu Dhabi delegation was looking at two opportunities. One was a roughly US$2 billion long-term investment in agricultural land, notably to produce camel feed. The second related to Belgrade’s attractive location between the Danube and Sava rivers, which had made it a hub for heavy industry. The Abu Dhabi government saw past the grimy socialist-era factories and goods train depots to the potential of a Belgrade Waterfront. Two 747s may not have been the only data point in the recommendation that Peter took back to London, but they were certainly a sign of things to come. This insight may have been lost to us if Peter was not out in the field, guided by his own curiosity and desire to dig deeper. And indeed, foreign direct investment in Serbia would go on to double between 2014 and 2020.    

In it for the long haul 

We had been covering Serbia for a decade before Peter’s trip: in 2002 we had initiated a US dollar denominated position in the then Yugoslavia. (These were London Club loans issued as part of a workout of the country’s foreign debt to commercial creditors.) We held the position until the debt was redeemed in 2018. Today, T. Rowe Price remains one of the largest investors in Serbia, and we have diversified. As the market evolved, in 2014 we started building up our position in the local currency bonds. This was not the start of T. Rowe Price’s relationship with Serbia but it marked the point at which we started becoming one of the largest holders of its US dollar debt. 

The specific securities identified and described are for informational purposes only and do not represent recommendations.

¹The five ESG analysts work across both the equity and fixed income teams. 
²As of Dec. 31, 2023.  Firmwide and Dedicated Emerging Markets Fixed Income AUM include assets managed by T. Rowe Price Associates, Inc. and its investment advisory affiliates.