Yield on Albania’s 15-year government bonds has plunged to an all-time low, with the latest auction seeing a dramatic drop. According to the Bank of Albania, the coupon and uniform yield for these bonds dropped to 5.59% this week, down from 6.41% in the previous auction held in November 2024.
This marks the fifth consecutive auction where the yield has fallen, setting a historic low. Compared to the same period last year, the yield has dropped sharply by 2.35 percentage points. Even more striking, the yield fell below 5.88% — the rate seen during the first-ever auction for these bonds in November 2021, when the base interest rate was still at 0.5%.
The auction’s success reflects strong demand, with investor applications totaling 5.1 billion lek, far exceeding the 2 billion lek initially announced by the Ministry of Finance. In response to this high demand, the ministry increased the issue value to nearly 2.3 billion lek.
The trend of falling yields continues into the new year, driven by the lack of financing pressures on the government and high demand from banks. The Central Bank’s monetary policy also played a role, reducing the base interest rate twice last year, from 3.25% to 2.75%.
Foreign investors are playing a significant part in the demand for Albania’s government debt, having bought a total of 14.4 billion lek (about €143 million) in Albanian debt instruments last year. This represents 29% of the country’s domestic borrowing increase for 2024.
The positive economic outlook and the country’s improving credit ratings have further fueled investor interest. Last year, both S&P Global Ratings and Moody’s raised Albania’s sovereign debt ratings, reflecting the country’s growing economic strength.
This week also saw strong demand for Albania’s Eurobond issue on the London Stock Exchange, with investor interest reaching €3.7 billion for the €650 million offered. The 10-year Eurobond, with a yield of 5% and a coupon rate of 4.75%, was a major hit among investors.
