Investment opportunity, this month the new auction of 15-year bonds takes place

2024-02-05 07:27:18, Ekonomi CNA

The Albanian government will hold the first auction of bonds with a maturity of 15 years for the year 2024 in February.

According to the Ministry of Finance and Economy, the planned amount of bonds to be put up for sale at the February 26 auction will be two billion ALL.

The 15-year bonds are the longest-term debt securities ever issued by the Albanian government and were first issued in November 2021.

The new 15-year bond auction can be a good alternative for investors who aim for high returns against long-term financial investments, especially for institutional investors, such as investment funds and especially pension funds, who aim to increase the long-term returns of their portfolios. theirs. But, 15-year bonds can be a tempting alternative even for small investors, who, especially in the second half of 2022, were quite active in order to benefit from the significant increase in yields.

From October 2022, the Ministry of Finance and Economy has decided to reduce the minimum amount of participation in bond auctions to 300,000 ALL, from 500,000 ALL before. Participation in bond auctions can be done through commercial banks licensed by the Financial Supervision Authority (AMF) as commission companies for securities investment. The banks currently licensed for this service are ABI Bank, BKT, Credins Bank, Fibank, Intesa Sanpaolo Bank, OTP Bank, Raiffeisen Bank, Tirana Bank and Union Bank.

Investment opportunity, this month the new auction of 15-year bonds takes place

For sums up to ALL 50 million, investors can appear in auctions with competitive or non-competitive requests, but any request whose value exceeds the amount of ALL 50 million is classified as a competitive request regardless of the entity participating in the auction. Non-competitive claims are accepted at the average yield of accepted competitive claims.

According to the guideline, the bond amount offered is divided by 20% for non-competitive claims and 80% for competitive claims. In case the total amount of non-competing claims does not meet the 20% measure, then the unmet difference is offered for competitive claims. In the case when the total amount of non-competing claims exceeds the defined limit of 20%, then pro rata (proportion) is applied to this amount. In the event that the sum of the requested competing requests does not meet the 80% measure, then the unmet difference is offered to the non-competing requests.

Last year, the yields suffered a significant downward correction, especially in the bond segment, which caused the interest of individuals to invest to be lower. The data of the Financial Supervision Authority (AMF) showed that for 2023 the purchases of individuals in the primary market of bonds and bonds reached ALL 37.5 billion, down by 24.5% compared to 2022.

However, it is worth saying that for long-term debt securities, yields have started to show a slight upward trend in the second half of last year. In the last auction organized in the primary market (reopening auction), in October of last year, 15-year bonds were sold with an agreed uniform yield of 7.98%./ Monitor.al