Interest rates for treasury bills not in decline in latest BoA auction

Interest rates of treasury bills this week reined the nearly three-month cycle of continuous decline.

According to the Bank of Albania, 12-month maturity bills were sold at a weighted average interest rate of 1.8%, almost the same level as the previous auction, held in early April.

The stop of the further decline of interest rates came as a result of the decline in market demand for the purchase of government treasury bills.

For the first time this year, the auction did not provided the full declared amount for financing at ALL 8.7 billion.

The total offers were limited to about ALL 6.3 billion, indicating that high liquidity funneled in the market of government securities could be near its end, and together with it, even the cycle of interest rates in decline.

According to experts, the decline in interest rates of treasury bills in the first months of the year came as a consequence of adding money to the market, which likely a crucial role was played by the Bank of Albania’s liquidity injection operations.

It seems that excess liquidity may be now exhausted, while the reduction of interest rates has gradually diminished the incentives for investors to buy bonds.

As expected, the new cycle of low interest rates is inhibited at higher levels, differently from what occurred last year, where interest rates for special instruments fell well below the benchmark rate.

SCAN

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