12-month T-bills yields up to 7.34%

TIRANA, March 13 – Treasury bill yields registered another increase in this week’s auction, continuing their upward trend since mid-November 2011 despite the central bank having lowered the key interest rate by 0.5 percent to a historical record low of 4.5 percent since then. In the latest Bank of Albania auction, 12-month T-bill yields slightly rose by 0.02 percent to 7.34 percent while 6-month T-bill yields climbed to 6.2 percent, up from 6.09 percent in the previous auction.
Albania’s central bank auctioned 14.3 billion lek in this week’s auction, of which 10 billion lek in 12-month T-bills. While the number of competitive bids for 12-month T-bills was high, in the 6-month T-bills the BoA received only 9 competitive bids all of which were accepted, a situation which led yields rising by 0.11 percent.
The 7.34 percent yield for 12-month T-bills is the highest since mid-November 2011 when yields entered a falling trend prompted by the Bank of Albania key interest rate cuts.
The situation is a result of low demand by prtivate investors who are perceiving increased risk in government bonds as Albania’s public debt remains in the legal limit of around 60 percent of the GDP and the economy is failing to recover to moderate growth rates.
The Bank of Albania organizes 3-month and 6-month T-bill auctions every month and 12-Month T-Bill auctions every two weeks. T-bills are issued and guaranteed by the Ministry of Finance on behalf of the Albanian government. T-bills are traded in the primary and secondary markets. The minimum amount to participate in the primary T-bills market is 300,000 lek (3,000 U.S. dollars).