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20-year bond yields rise, reaching 6.5%

2025-06-11 14:09:00, Ekonomi CNA

Yields on 20-year bonds rose in this week's auction. According to data from the Bank of Albania, the accepted uniform yield on these instruments increased to 6.5%, from 6.17% in the last auction of these instruments in March.

Of the 2 billion lek that had been the amount announced for financing by the Ministry of Finance, the total value of the requests in the auction was limited to 1.93 billion lek. The lower demand than the amount offered may partially explain the increase in the yield of these instruments.

On the other hand, for more than a year, the yields of Albanian government debt securities have been following a downward trend, a decline that has reached unprecedented levels, expressed as a margin in relation to the base interest rate.

For this reason too, it is expected that the market will follow a correction phase, especially in instruments with longer maturities.

The 20-year bonds are the longest-term debt instruments ever issued by the Albanian government.

These instruments are a good alternative, especially for institutional investors. Especially for companies that manage funds with a long-term horizon, such as private pension funds, 20-year bonds create opportunities to enrich the spectrum of securities in portfolios and increase returns for members.

The addition of debt instruments with longer maturities creates more premises for developing the secondary securities market, to make these securities more liquid. For the first time last year, the market for Albanian government debt instruments in lek also attracted institutional investors from abroad.

The 20-year bonds were first issued in January of this year, through a market-testing auction.

The demand from investors was quite high and out of the 1.5 billion lek that was the announced amount of the issue, the total demand in the amount of 4.26 billion lek was presented at the auction. The uniform yield received and the bond coupon resulted in the level of 6.78%, below the reference coupon of 7% presented before the auction by the Ministry of Finance.

At the reopening of the auction, which took place in March, the accepted uniform yield of the auction decreased to 6.15%, following the general trend of the government debt instruments market.

The reopening of the auction also attracted considerable investor interest. Out of the announced issue amount of 1 billion lek, total requests for the auction amounted to 2.67 billion lek.

Meanwhile, in this week's auction, investor demand declined, partly reflecting some restrictions that continue to be applied by some of the foreign-capital banks, which have limits on investment in the Albanian government's longer-term debt instruments./ Monitor.al