TIRANA, Dec. 9 – With the key interest rate at historic low of 1.75 since early Nov. 2015, yields on government securities are also hitting record lows positively reflecting the central bank’s easier monetary policy and reducing the cost of domestic debt.
Yields on 12-month treasury bills hit a historic low of 2.54 percent in the latest auction held this week, down from 2.83 percent in late October and an average of 3.5 percent in early 2015.
Yields on 12-month T-bills have almost halved in the past couple of years, dropping from 6.6 percent in early 2013 to 3.83 percent in January 2014 and 3.59 percent in the latest auction. The cut has considerably reduced the cost of government’s internal borrowing, with 12-month T-bill being the key instrument.
Yields on 6-month treasury bills also dropped to 2.46 percent in the latest auction, down from 2.82 percent in the previous auction and 3.23 percent in early January 2015.
Experts explain the declining trend in T-bill yields with the consecutive cuts to the key rate and more active participation by commercial banks which have turned to investments in government securities due to poor demand for new loans and tight lending standards as non-performing loans have reached a record 23 percent.
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.
