Money market report

ECB Monetary Operations

On Monday, November 21, the ECB announced its weekly Main Refinancing Operation. The auction was conducted on Tuesday, November 22, and attracted bids from euro area eligible counterparties of €247.18 billion, €16.91 billion higher than the amount bid for in the previous week. The bid 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.

Also on Tuesday, November 22, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €194.5 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, 18. 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 €233.09 billion, with the ECB allotting €194.5 billion or 83.44% of the total amount bid for. The marginal rate on the auction was set at 0.63%, with the weighted average rate at 0.60%.

On Wednesday, November 23, the ECB conducted a six-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve.  This operation attracted bids of $0.552 billion, which 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 maturing on December 23, 2011. Bids of €19.3 million were submitted, with the Treasury accepting only €1.25 million. Since €10 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €8.75 million, to stand at €325.35 million.

The yield from the 28-day bill auction was 1.250%, i.e. 5 basis points lower than that on bills with a similar tenor issued on November 18, 2011, representing a bid price of 99.9029 per 100 nominal.

During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €0.04 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 30, 2011.