Money market report

ECB Monetary Operations

On Monday, January 2, the ECB announced its weekly Main Refinancing Operation.  The auction was conducted on Tuesday, January 3, and attracted bids from euro area eligible counterparties of €130.62 billion, €14.13 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, January 3, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €211.5 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 30.  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 €336.93 billion, with the ECB allotting €211.5 billion or 62.77% of the total amount bid for. The marginal rate on the auction was set at 0.44%, with the weighted average rate at 0.36%.

On Wednesday, January 4, 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 $6.15 billion, which were allotted in full at a fixed rate of 0.58%.

On the same day, the ECB, in conjunction with the US Federal Reserve, conducted an 84-day US dollar funding operation through collateralised lending. This attracted bids for $25.52 billion, which amount was allotted in full at a fixed rate of 0.58%.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 90-day and 182-day bills maturing on April 5, 2012 and July 6, 2012, respectively. Bids of €37.5 million were submitted for the 90-day bills, with the Treasury accepting only €5 million, while bids of €45.4 million were submitted for the 182-day bills, with the Treasury accepting also €5 million. Since €29.19 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €19.19 million, to stand at €238.71 million.

The yield from the 90-day bill auction was 0.810%, i.e. 1.4 basis points lower than on bills with a similar tenor issued on December 30, 2011, representing a bid price of 99.7979 per 100 nominal. The yield from the 182-day bill auction was 1%, i.e. 33 basis points lower than on bills with a similar tenor issued on December 9, 2011, representing a bid price of 99.4970 per 100 nominal.

During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €0.75 million and was conducted by the Central Bank of Malta in its role as market-maker.

On Tuesday, the Treasury invited tenders for 91-day bills and 273-day bills maturing on April 13, 2012 and October 12, 2012, respectively.