TIRANA, August 1 – T-bill yields registered a slight decrease in this week’s auction after the Bank of Albania cut the key interest rate by another 0.25 percent to a historical record low of 4 percent, reflecting the first positive impacts of the monetary policy. In this week’s auction 12- month T-bill yields dropped to 7.26 percent, down from 7.34 before the central bank lowered the key interest rate by another 0.25 percent to 4 percent. Three-month T-bill yields averaged 5.23 percent, down only 0.03 percent compared to the previous auction.
Government sold 9.2 billion lek in 12-month and 3-month T-bills in this week’s auction.
Last week, government managed to secure only Euro 11 million in 12-month Euro-denominated T-bills in an auction where it was seeking to sell Euro 15 million as part of a campaign targeting migrants. Average T-bill yields registered 5.66 percent, around 2.3 percentage points higher than Euro-denominated deposits, said the Finance Ministry.
Although having lowered the key interest rate by 1.25 percentage point to a historical record low of 4 percent since Sept 2011, the Bank of Albania interventions in the monetary policy have not been reflected at all in lowering T-bill yields. Twelve-month T-bill yields have been on an upward trend since Dec. 2011 climbing from 6.95 percent to 7.38 percent in June 2012.
Investing in T-bills proves more profitable than investing in deposits as 12-month T-bill currently stand at 7.35 percent while interest rate for 12 month lek-denominated deposits are at an average of 5.7 percent. In order to participate in T-bill auctions, individuals must open a bank account with a minimum of 300,000 lek (Euro 2,132) in licensed institutions and order them to make the purchases.
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 dominate government securities market
The secondary market of government securities was dominated by transactions in short-term instruments (T-Bills) at 78.25 percent and long-term instruments (treasury-bonds) at 21.75 percent during the first half of this year. The Financial Supervisory Authority says that in terms of the number of transactions, 97 percent of all transactions in the secondary market of government securities were in T-Bills. Participation in the government securities secondary market was dominated by individual investors, who performed about 98.12 percent of all transactions in the market.
