Money Market Report

On Monday, November 7, the ECB announced its weekly Main Refinancing Operation.  The auction was conducted on Tuesday, November 8, and attracted bids from euro area eligible counterparties of €194.77 billion, €12 billion higher than the amount bid for in the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.25%, in accordance with current ECB policy.

On Tuesday, November 8, the ECB conducted a Special Term Refinancing Operation with a maturity of 35 days. This attracted bids of €55.55 billion which were allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.25%, also in accordance with the current ECB policy.

Also on Tuesday, November 8, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €183 billion. This operation is designed to sterilise the effect of purchases made under the Securities Markets Programme that were settled but had not yet matured by the previous Friday, November 4.  The auction was carried out at a variable rate, with euro area eligible counterparties allowed to place up to four bids at a maximum rate of 1.25%. It attracted bids amounting to €214.82 billion, with the ECB allotting €183 billion, or 85.19%, of the total amount bid for. The marginal rate on the auction was set at 0.69%, with the weighted average rate at 0.64%.

Furthermore, on Tuesday, November 8, being the last day of the reserve maintenance period, the ECB conducted an overnight Fine-tuning Liquidity Absorbing Operation at a variable rate, with counterparties allowed to place up to two bids at a maximum rate of 1.50%.  The operation attracted bids of €284.11 billion, with the ECB accepting €284.04 billion or 99.98%. The marginal rate on the operation was set at 1.30%, while the weighted average rate was 1.27%.

On Wednesday, November 9, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve.  This operation attracted bids of $0.50 billion, which was allotted in full at a fixed rate of 1.08%.

On the same day, in accordance with the Governing Council's decision of September 15, 2011, the ECB, in conjunction with the US Federal Reserve, conducted an 84-day US dollar funding operation through collateralised lending. This attracted bids of $0.395 billion, which amount was allotted in full at a fixed rate of 1.09%.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 28-day bills and 90-day bills maturing on December 9, 2011, and on February 9, 2012, respectively. Bids of €37.3 million were submitted for the 28-day bills, with the Treasury accepting €20.3 million, while bids of €48.55 million were submitted for the 90-day bills, with the Treasury accepting €30.15 million. Since €42.88 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €7.58 million, to stand at €339.15 million.

The yield from the 28-day bill auction was 1.332%, i.e. 2.4 basis points lower than that on bills with a similar tenor issued on November 4, 2011, representing a bid price of 99.8965 per 100 nominal. The yield from the 90-day bill auction was 1.460%, i.e. 1.3 basis points lower than that on bills with a similar tenor issued on November 4, 2011, representing a bid price of 99.6363 per 100 nominal.

During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €0.062 million and was conducted by the Central Bank of Malta in its role as market-maker.

On Tuesday, the Treasury invited tenders for 28-day bills, maturing on December 16, 2011.