Pandemic insecurities increase the demand for government bonds

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Investors see the long-term government bond as a good and safe investment alternative under the pandemic.

According to the Bank of Albania, the demand for the recent auction of government 7-year bonds mounted up to 8.1 billion ALL. The amount announced by the Ministry of Finances was 3 billion ALL.

The coupon of sold bonds reached the 4.25% level, marking a decrease from the previous auction (4.38%) held in September 2020. The interest rate decrease was caused by the high demand for these financial instruments.

The interest rates of short-termed bonds have marked a slight increase during the first trimester. 3-month bonds have reached 1.29%, 6-month to 1.76%, and 12-month bonds 2.1%. The interest rates of 2-year bonds reached 2.65% in the last auction; 3-year bonds 2.8% and 5-year bonds 3.7%.

The government bonds are currently being seen as a lucrative investment alternative under the pandemic, since its risk factor is almost zero.