T-bill yields hit new record low of 3.62%

TIRANA, Dec. 11 – T-bill yields hit a new record low this week when the Bank of Albania auctioned 11.3 billion lek (Euro 79 million) on behalf of the Albanian government. Yields on 12-month T-bills, which are the key instrument of domestic public debt, dropped to 3.62 percent in this week’s auction, slightly down from 3.71 percent in the previous auction, and almost half of the record 6.6 percent in January 2013. Although T-bill yields continued their downward trend government managed to sell only 8.3 billion lek in 12-motnh T-bills from an announced 8.9 billion lek.
Meanwhile, six-month T-bill yields dropped to 3.39 percent in this week’s auction, down from 3.49 percent in the previous auction and 6.08 percent in January 2013, according to central bank data.
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 percent to 3.25 percent in several consecutive interventions, but the moves have only been reflected on lower T-bill yields and interest rates for lek-denominated deposits.
Meanwhile, average interest rates on lek-denominated loans have remained almost unchanged during the past two years, reflecting the failure of the consecutive cuts to the key interest rates in the past two years.