Treasury bonds rise above 5%, all “actors” change their behavior

The increase in the basic interest rate has fundamentally changed the behavior of actors in the market for Treasury bonds and other bonds. While banks acted differently, bonds have already changed their behavior by increasing investments by nearly 130 million dollars over the first half of the year. While the opposite has happened with individuals, who have reduced their presence in this market. The behavior of the government has also changed, by significantly increasing borrowing.

The Bank of Albania’s official data show that net borrowing in the domestic securities market increased by 7 billion dollars in the third quarter. This addition was entirely formed by the issuance of instruments up to one year, which compensated for the reduction of 4 billion ALL in the portfolio in long-term bonds. At the end of September, net borrowing in the domestic market amounted to about $4 billion out of the $33 billion planned in total for 2022. The non-fulfillment of the amounts announced for issuance, mainly during the first half of the year, has posted a relatively high amount of domestic deficit financing in the second half.

Banks have increased their participation in the auctions of government bonds, with about 13 billion ALL in the third quarter, after the decline they showed at the end of the first quarter and partially in the second quarter. Investment policies in government securities are oriented toward short-term instruments, adapting the government’s borrowing strategy to the preferences of commercial banks. Individuals, on the other hand, have withdrawn from investments in government securities during this quarter, partially channeling their savings towards deposits in the banking system. Other non-banking financial institutions continue to find investment in government securities attractive, further increasing their exposures to government securities.

Lorenc Rabeta / SCAN

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