Gov’t debt interest rates drop in the latest bonds’ auction

Government debt interest rates dropped once again in auctions this week, showing once again that the domestic financial market remains liquid and demand to buy bonds and bills is still high.

At Tuesday’s auction, 12-month maturities were issued at a weighted average interest rate of 2.23%.

Interest rates declined for the seventh auction in a row and since the beginning of the year they have fallen by more than half a percentage point.

Similar tendencies have reported the two-year bonds as well.

At Monday’s auction, interest fell to 2.9%, declining for the fifth consecutive month.

The decline in interest rates is clearly explained by the ratio between demand and supply in the government debt market.

At Tuesday’s auction, claims amounted to ALL 11.1 billion, while the amount announced for government funding was ALL 9.7 billion.

Banks, which are the main financier of domestic government debt, appear to be investing more in government debt instruments.

This is because the market has abundant liquidity, but also because private sector lending is still growing at sluggish rates.

In the first months of this year, the liquidity injected by the Bank of Albania in the market was high.

According to data from the Central Bank, at the end of March this year, the value of the loan to the banking sector, through repurchase agreements, amounted to ALL 42 billion, about 60% more compared to the same period of the previous year.

SCAN

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