T-Bill yields unexpectedly rise

TIRANA, Feb. 15 – The latest Bank of Albania decision to lower the key interest rate for the national currency, lek, to a historical record low of 4.5 %, has had a surprising adverse impact on 12-month T-bill yields which in the last auction organized by the central bank registered a 0.21 percent increase. In the latest auction held on Feb. 14, 12-month T-bills yields rose to 7.21 percent up from 7 percent in the previous auction held in Jan. 31. despite the same 12 billion lek amounts borrowed. The 7.21 yield is the highest since mid-November 2011 when yields entered a falling trend prompted by the Bank of Albania key interest rate cuts. However, new developments show investors are perceiving an increased risk in 12-month Bills as Albania’s public debt remains in the legal limit of around 60 percent of the GDP and the economy is failing to recover to moderate growth rates.
Meanwhile, 6-month T-bill yields dropped to 6.09 percent, down from 6.23 percent last January.
Albania’s central bank auctioned 16.5 billion lek in 12-month and 6-month T-bills in the latest auction. 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 are traded in the primary and secondary markets. The minimum amount to participate in the primary T-bills market is 300,000 lek (3,000 U.S. dollars).