Interest rates of debt government securities have started even the year 2020 with decline. T-Bonds with 10 year maturity were issued at the beginning of this week with a coupon of 5.29%, declining from the level of about 5.53% in the previous auction held in October last year. Ministry of Finance fulfilled almost the entire amount declared, around 4 billion ALL.
The demand to buy the T-Bonds through auctions was at the amount around 5.7 billion ALL, confirming a high interest from market to invest in government securities. Because of their long maturity, 10 year T-Bonds offer also higher returns in comparison with other financial instruments denominated in national currency. They are still the most appropriate investment for the long term oriented institutions, such as investment funds and especially, the pension ones.
The first auction of this year confirms the expectation for low interest rates during this year. The financial market is presented very liquid, taking in consideration the further decline of the interest rate. During the last year, inflation decreased beyond the Bank of Albania’s forecasts, at the level around 1.4%. In these conditions, the increase of interest rate, which could happen in the middle of this year, is expected to be postponed. Consequences in the economy from the November’s earthquake might also be a factor that will impose the preservation of low cost money from Bank of Albania (central bank).