Money market report

ECB Monetary Operations

On Monday, January 16, the ECB announced its weekly Main Refinancing Operation.  The auction was conducted on Tuesday, January 17, and attracted bids from euro area eligible counterparties of €126.88 billion, €15.95 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 1.00%, in accordance with current ECB policy.

On Tuesday, January 17, the ECB conducted a Special Term Refinancing Operation with a maturity of 28 days. This attracted bids of €38.73 billion which were allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.00%, also in accordance with current ECB policy.

Also on Tuesday, January 17, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €217 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, January 13.  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 €377.64 billion, with the ECB allotting €217 billion, or 57.46%, of the total amount bid for. The marginal rate on the auction was set at 0.31%, with the weighted average rate at 0.29%.

On Wednesday, January 18, 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 $5.89 billion, which were allotted in full at a fixed rate of 0.59%.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 182-day bills maturing on April 20, 2012 and on July 20, 2012, respectively. Bids of €64.9 million were submitted for the 91-day bills, with the Treasury accepting only €5 million, while bids of €63 million were submitted for the 182-day bills, with the Treasury accepting only €5 million. Since €11.15 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €1.15 million, to stand at €221.82 million.

The yield from the 91-day bill auction was 0.70%, i.e. 4.9 basis points lower than that on bills with a similar tenor issued on January 13, 2012, representing a bid price of 99.8234 per 100 nominal. The yield from the 182-day bill auction was 1.00%, unchanged from bills with a similar tenor issued on January 6, 2012, representing a bid price of 99.4970 per 100 nominal.

During the week under review, there was no trading on the Malta Stock Exchange.

On Tuesday, the Treasury invited tenders for 91-day bills and 182-day bills maturing on April 27, 2012 and on July 27, 2012, respectively.