TIRANA, Nov. 2 – Yields on government securities have embarked on rising trend in the past few months after hitting a historic low last June just before the country’s central bank cut its key rate to a new all-time low of 1.25 percent.
Yields on 12-month T-bills, the government’s key instrument for internal borrowing, rose to 2.05 percent in the latest Oct. 25 auction, in a gradual rising trend after hitting a historic low of 1.24 percent last June.
Yields on two-year notes, the government’s key instrument for long-term debt in the domestic market, also rose to 2.7 percent in the latest Oct. 24 auction when the government borrowed 2.8 billion lek (€21 million). Yields on two-year notes rose from 2.03 percent last September, and a record low of 1.5 percent last June.
The increase in yields has been fuelled by a low number of bidders and government’s rising debt financing needs although interest rates on government securities are considerably more favourable compared to investment in traditional bank deposits whose average interest rates for the national currency stand below 1 percent.
Yields on 12-month T-bills have more than halved in the past three years, dropping from 6.6 percent in early 2013 to 3.83 percent in January 2014 and 2 percent in early 2016, considerably reducing the cost of government’s internal borrowing.
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.
