Money market report

ECB Monetary Operations

On Monday, January 30, the ECB announced its weekly Main Refinancing Operation.  The auction was conducted on Tuesday, January 31, and attracted bids from euro area eligible counterparties of €115.58 billion, €14.74 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.

Also, on Tuesday, January 31, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €219 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, January 27.  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 €325.50 billion, with the ECB allotting €219 billion or 67.28% of the total amount bid for. The marginal rate on the auction was set at 0.28%, with the weighted average rate at 0.27%.

On Wednesday, February 1, 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 $3.74 billion, which were allotted in full at a fixed rate of 0.59%.

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 $9.36 billion, which amount was 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 May 4, 2012 and August 3, 2012, respectively. Bids of €24.74 million were submitted for the 91-day bills, with the Treasury accepting the full amount, while bids of €17 million were submitted for the 182-day bills, with the Treasury accepting €10 million. Since €33.15 million worth of bills matured during the week, the outstanding balance of Treasury Bills increased by €1.59 million, to stand at €218.26 million.

The yield from the 91-day bill auction was 0.890%, i.e. 19.8 basis points higher than on bills with a similar tenor issued on January 27, 2012, representing a bid price of 99.7755 per 100 nominal. The yield from the 182-day bill auction was 1.005%, i.e. 1.2 basis points lower than on bills with a similar tenor issued on January 27, 2012 representing a bid price of 99.4945 per 100 nominal.

During the week under review, Treasury Bill trading on the Malta Stock Exchange amounted to €0.81 million and was conducted by the Central Bank of Malta in its role as market-maker.

On Tuesday, the Treasury invited tenders for 92-day bills and 274-day bills maturing on May 11, 2012 and November 9, 2012, respectively.