T-bill yields slightly drop

TIRANA, Jan. 28 – Yields registered a slight drop in this week’s auction when the Albanian government purchased around 14 billion lek in 12 month and 3-month T-bills. Yields on 12-month T-bills which are the key instrument of government’s domestic debt dropped to 3.8 percent in this week’s auction, slightly down from 3.83 percent in the previous auction earlier on January while yields on 3-month bills dropped to 3.36 percent down from 3.52 percent in late December 2013 and 6.6 percent in early 2013.
Yields on government securities registered a slight increase in early January 2014 despite the key interest rate standing at historic low of 3 percent, unveiling signs of a rising trend in yields as public stands at a staggering 70 percent of the GDP and Standard & Poor’s, one of the top three international agencies, lowered Albania’s long-term sovereign credit ratings to ‘B’ from ‘B+ with a negative outlook.
In the first auctions for 2014 held, 12-month T-bill yields slightly rose to 3.83 percent, up from a record low of 3.62 percent on December 11, 2013, which is an all-time low.
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.