Interest rates for 2-year gov’t bonds fall to 2.63%

The reduction of interest rates for government debt securities has extended even to the two-year bonds.

This month’s auction, held on Wednesday, saw the average interest coupon of bonds falling to 2.63%, from 3.35% that it was in the previous auction.

A similar trend is observed in the last two months in auctions of treasury bills.

The main reason is that the market seems to have more free liquidity compared with the last quarter of last year.

At the Wednesday’s auction, the offered bonds issue by the Ministry of Finance were at the level of ALL 4.8 billion bonds, while the demand amounted to nearly ALL 8.5 billion.

Free liquidity is boosting demand for bonds and treasury bills, while lending remains dim, which is something common in the first months of the year.

Another factor could be the increasing support for the market with liquidity from the Bank of Albania.

Also, the increased demand for investment in government securities is also supported by improved interest rates, as they had reached rock bottom in the midst of last year.

Whatever the reasons, the performance of the primary market of government debt confirms expert predictions that interest rate rise would be limited in the form of a correction from extremely low values marked in 2016.

SCAN

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