Money Market Report

ECB Monetary Operations

On Friday, December 23, the ECB announced its weekly Main Refinancing Operation.  The auction was conducted on Tuesday, December 27, and attracted bids from euro area eligible counterparties of €144.75 billion, €24.27 billion lower 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 1.00%, in accordance with current ECB policy.

On Tuesday, December 27, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €211 billion. This operation was 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, December 23.  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 1.00%. It attracted bids amounting to €263.34 billion, with the ECB allotting €211 billion or 80.13% of the total amount bid for. The marginal rate on the auction was set at 0.89%, with the weighted average rate at 0.56%.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 181-day bills maturing on March 30, 2012 and June 28, 2012, respectively. Bids of €23.80 million were submitted for the 91-day bills, with the Treasury accepting only €0.50 million, while bids of €27 million were submitted for the 181-day bills, with the Treasury rejecting all. Since €1.5 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €1 million, to stand at €257.90 million.

The yield from the 91-day bill auction was 0.824%, i.e. 7.5 basis points lower than on bills with a similar tenor issued on December 23, 2011, representing a bid price of 99.7921 per 100 nominal.

During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €2 million and was conducted by the Central Bank of Malta in its role as market-maker.

On Tuesday, the Treasury invited tenders for 90-day bills and 182-day bills maturing on April 5, 2012 and July 6, 2012, respectively.