The government bond and bond market is also attracting foreign investors

2024-08-19 08:44:44, Ekonomi CNA

The internal market for Albanian government debt securities is also attracting investors from abroad.

According to the Bank of Albania, a new phenomenon that is being registered this year is the purchase of government securities by non-resident investors. Their portfolio at the end of the 6th month of 2024 reached the value of about 6 billion ALL. This amount constitutes 0.8% of the total domestic debt.

However, the participation of non-resident investors during the second quarter of 2024 covered about 18% of the addition of government debt.

Bank of Albania data show that new net borrowing in the domestic market increased by ALL 24.7 billion in the second quarter. On this basis, it can be calculated that nearly ALL 2.5 billion was the additional borrowing that was financed by non-resident investors.

Sources from the financial sector say that in recent years, foreign investors are showing a growing interest in the government securities market in Albania. Experts estimate that the bonds of the Albanian government offer very attractive returns, compared to the bonds of more developed countries, so they are seen as an alternative to diversify investment portfolios. A high interest of investors in the bonds of the Albanian government has also been observed in the emission of Eurobonds, during the last years. This interest, now, seems to be extending to the securities issued in the domestic market, in the national currency Lek.

The increase in the borrowing of the Albanian government in the second quarter consisted almost entirely, 97%, in bonds, with a maturity of two to 15 years. Most of the debt instruments were bought by banks in the second quarter, financing about 68% of the government's additional borrowing. Individuals covered about 8% of net borrowing in the domestic market.

On the other hand, net borrowing in the foreign market in the second quarter was reduced by ALL 8.8 billion. For the first half of the year, net borrowing in the foreign market was negative for ALL 10.6 billion. The liquidity surpluses in foreign currency inherited from the previous year, as a result of the Eurobond issuance, were used to service the foreign debt throughout the year 2024. Developments in government borrowing together with the values ??of the fiscal surplus of this period were factored into high liquidity surpluses, available for spending in subsequent months.

Public debt was estimated at around 56.8% of GDP at the end of the first half of 2024, reducing by around 2.1 percentage points from the level recorded at the end of 2023.

According to the Bank of Albania, the further decline of this ratio is related to the appreciation of the local currency, economic growth and the improved fiscal position during the first half of the year.

The budget balance was positive even in the second quarter at about 19 billion ALL. The value recorded at the end of the first half of the year of the fiscal surplus was ALL 51.4 billion, estimated at 4.3% of GDP./ Monitor.al