New domestic borrowing instrument/ 2.5-year bonds issued for the first time

2025-12-19 20:31:00, Ekonomi CNA

The Ministry of Finance will use a new domestic borrowing instrument, 2.5-year bonds, for the first time in 2026. According to the borrowing calendar for the first quarter of 2026, the Ministry of Finance has planned to hold the auction in January, with two reopenings in February and March.

The purpose of issuing a bond with an incomplete annual cycle for the first time is to reduce the concentration of domestic debt maturities in the first quarter of the year.

The first quarter of the year is the period with the highest concentration of domestic debt issuance. According to data from the Ministry of Finance, for the first quarter of 2026 the value of debt issued (including refinancing) will be 134 billion lek, or more than 35% of the total annual value of projected issuances.

This concentration is also reflected in the maturity structure of the instruments.

In the first quarter of 2026, the value of maturing debt will reach 164.4 billion lek. This amount constitutes more than 49% of the total value of debt maturing during 2026.

The issuance of instruments with a maturity of 2.5 years will shift the maturity of the relevant debt to the third quarter of 2028, enabling a more balanced distribution of domestic debt issuances and maturities throughout the calendar year in the future.

During 2026, the Ministry of Finance has planned a total value of bonds and debentures in the domestic market of 380.1 billion lek. Deducting the value of maturing debt and buybacks, net new borrowing will be 45 billion lek, down from the 50 billion lek level in 2025.

The Albanian government bond and bond market has been characterized by a downward trend in yields over the past two years. During 2025, yields on longer-term securities even touched historic lows, while yields on treasury bills remained close to or below the base interest rate.

The government's more moderate demand for financing has been one of the factors, in parallel with the improvement of sovereign debt risk assessment by specialized agencies. This has also led to an increase in the spectrum of interested investors, including entities from abroad and consequently increased demand in government bond auctions./monitor