Serbia has raised €500mn through a private placement of six-year euro-denominated notes with international institutional investors to finance the modernisation of its armed forces, the finance ministry told Tanjug on July 15.

The notes carry a 4.75% annual coupon and were sold at 98.666% of face value, resulting in an annual yield of 5.013%. The securities mature on July 20, 2032, with settlement scheduled for July 20.

The finance ministry said the transaction followed interest from international investors and that a private placement was chosen as the most efficient financing method under prevailing market conditions.

Proceeds will be used to finance capital expenditure under Serbia's military modernisation programme, including the procurement of defence equipment and related technologies, the ministry confirmed to Tanjug, after initial reports by N1 and Forbes Srbija.

The issue was carried out under Serbia's Global Medium-Term Note (GMTN) programme, established in 2020 and most recently updated in April 2026. The bonds have a nominal value of €100,000 each, with additional purchases permitted in increments of €1,000.

The government did not disclose the identities of the investors participating in the placement. According to the official decision, the securities will be registered through Deutsche Bank Luxembourg, with clearing and settlement handled by Euroclear Bank and Clearstream Banking.

Market analysts said the transaction marked Serbia's first international private placement of sovereign bonds, differing from its traditional public Eurobond offerings.

"This type of financing is usually used to raise capital more quickly, although it can come at a higher cost than a conventional international bond issue," Nenad Gujaničić, chief broker at Momentum Securities, told Serbian broadcaster N1.

In April, Serbia raised around €3bn through a triple-tranche Eurobond sale, with investor demand exceeding €8bn.

According to the latest finance ministry data, Serbia's public debt stood at €41.14bn at the end of May, equivalent to 43.7% of gross domestic product, up from 41.6% a month earlier.