TIRANA, June 2 – Yields on 12-month T-bills slightly dropped in the last two auctions held by the country’s central bank, positively reflecting the key interest rate which last March was cut to a new historic low of 2 percent. In the latest Bank of Albania auction, yields on 12-month T-bills slightly dropped to 3.39 percent, down from a record high of 3.6 percent for this year last March and a historic low of 3.18 percent in early September 2014.
Yields on 3-month T-bills also dropped to 2.9 percent, down from 3 percent in the previous auction and 3.22 percent last January.
Yields on 2-year treasury bonds also dropped to 4.72 percent last May, down from 4.92 percent in the previous auction and 5.05 percent last January.
Yields on 12-month T-bills have almost halved in the past couple of years, dropping from 6.6 percent in early 2013 to 3.83 percent in January 2014 and 3.59 percent in the latest auction. The cut has considerably reduced the cost of government’s internal borrowing, with 12-month T-bill being the key instrument.
Experts explain the declining trend in T-bill yields with the consecutive cuts to the key rate and more active participation by commercial banks which have turned to investments in government securities due to poor demand for new loans and tight lending standards as non-performing loans have reached a record 23 percent.
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.
