12-month T-bills drop to historic low of 3.56%

TIRANA, April 9 – Treasury bill yields hit a new historic low this week when the country’s central bank sold 15.8 billion lek (Euro 110 million) in 12 and 6-month T-bills on behalf of the Albanian government.
Yields on 12-month T-bills which are the key instrument of government’s internal borrowing dropped to a record low of 3.56 percent, down from 3.64 percent in the previous auction, 3.83 in early January 2014, and a record 6.6 percent in early 2013. Meanwhile, yields on 6-month T-bills dropped to 3.32 percent, down from 3.4 percent in the previous auction and 6.08 percent in early 2013.
Experts explain the declining trend in T-bill yields with more active participation by commercial banks which have turned to investments in government securities due to poor demand for new loans as non-performing loans have reached a record 24.4 percent and lending stands at negative growth rates of 2 percent.
Since September 2011, the Bank of Albania has cut the key interest rate by 2.5 percent to 2.75 percent in several consecutive interventions, but the moves have only been reflected on lower T-bill yields and interest rates for lek-denominated deposits.