Albanian gov’t’s coupon bonds fell to 2.25% in BoA’s April auction

Interest rate on Albanian government 2-year bonds fell in the auction of April.

According to the Bank of Albania, coupon bonds fell to 2.25% from 2.63% that they had been in the previous auction.

At the auction held this week, from ALL 5 billion bonds issued by the Ministry of Finance, the demand submitted in the auction amounted to ALL 5.85 billion.

The huge market demand to invest in securities of government debt is the main reason for the decline of interest rates in the first half this year.

A similar trend has been observed in the last three months regarding auctions of treasury bills.

The market seems to have a lot more free liquidity compared with the last quarter of last year.

This is increasing the demand for treasury bills and bonds, given that crediting remains dim, which is somewhat common in the first months of the year.

A factor with a considerable impact could be the increase of market liquidity support from the Bank of Albania, with the aim to stabilize the market of government securities in domestic currency, following fluctuations reported at the end of 2016.

On the other hand, the rise in interest rates in the last quarter of 2016 has supported a gradual increase in demand for investing in government debt instruments.

For the moment, the new cycle of declining treasury bills and bonds interest rates, holds under check pressure to increase interest rates on deposits and bank loans.

SCAN

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