Bank of Albania to put in auction EUR 20 ml bonds on August 18th

Bank of Albania will put in auction EUR 20 ml bonds with 2 years maturity on August 18^th on the account of the Ministry of Finances, says a public statement by the Bank.  The auction comes as another effort of the Bank to sell bonds on behalf of the Ministry of Finances, since by the end of July of this year the Bank put in auction EUR 45 ml one year bonds but they were not sold due to lack of interest shown by financial institutions.

The total offered amount for these bonds was EUR 8ml less than what Bank of Albania had requested for these bonds, only EUR 37.1 ml. By selling these bonds, the Ministry of Finances aims to finance the public debt.

With the aim to encourage private banks to increase interest for bonds in Euro currency, Bank of Albania approved a new regulation which decreased the risk-weighting for banks if they would buy from the Albanian government. Based on the new regulatory, if a private bank buys EUR 1 bonds emitted by the government, the investment is considered risky only EUR 0.5 on capital adequacy, while previously this amount was EUR 1.

The government hopes private banks will show interest in buying bonds in Euro currency, given that they have huge amounts of deposits in this currency. The upcoming auction of bonds in Euro currency with 2 year maturity is the third in a row for this year.

News source/photo credits: ATA