T-bill yields hit new record low of 4.31%

TIRANA, 12-month T-bill yields hit a new historic low of 4.31 percent in this week’s auction organized by the Bank of Albania on behalf of the Albanian government. Meanwhile, six-month T-bill yields dropped to 3.99 percent, down from 4.52 percent in the previous auction.
Some 43 bids were submitted in the Sept. 11 auction of which the central bank accepted only 13 bids ranging from yields between 4.2 percent to 4.35 percent. Albania’s central bank sold 10 billion lek in 12 and 6-month T-bill in the latest auction.
With lending striving to remain at positive growth rate and banks seeing government securities as one of their few investment opportunities, T-bill yields continue registering new record lows. 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. The latest cut to the key interest rate to a historic low of 3.5 percent has also had a positive impact.
12-month T-bill yields have dropped to a historic low of 4.31 percent, down from 6.35 percent at the beginning of 2013 when the key interest rate was at 4 percent, considerably reducing the cost of Albania’s public debt currently standing at a record 62 percent of the GDP.
While loan interest rates have in general remained unchanged during the past two years of the easy monetary policy the Bank of Albania has followed, interest rates on deposits have significantly dropped. Since September 2011, the Bank of Albania has cut the key interest rate by 1.75 percent to 3.5 percent in several consecutive interventions, but the moves have only been reflected on lower T-bill yields and interest rates for lek-denominated deposits.