TIRANA, Dec. 21 – Yields on government securities have more than doubled in the past six months despite the key rate standing at a historic low of 1.25 percent, reflecting higher government demand for internal borrowing and lower interest by investors as yields had previously dropped to a historic low.
Yields on 12-month T-bills, the government’s key instrument for internal borrowing, rose to 3.02 percent in the latest Dec. 20 auction, up from a previous 2.82 percent in a gradual rising trend after hitting a historic low of 1.24 percent last June.
Meanwhile, yields on two-year notes, the government’s key instrument for long-term debt in the domestic market, also rose to 3.6 percent in the latest auction, up from a previous 3.35 percent and a record low of 1.5 percent last June.
The hike makes investment in government securities a much more favourable option compared to traditional bank deposits whose average interest rates for the national currency stand below 1 percent.
Yields on 12-month T-bills have more than halved in the past three years, dropping from 6.6 percent in early 2013 to 3.83 percent in January 2014 and 2 percent in early 2016, considerably reducing the cost of government’s internal borrowing.
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.
