Money market report

ECB decisions

On Thursday, February 9, the Governing Council of the ECB decided to keep the interest rate unchanged at 1.00% on the main refinancing operations (MROs). Interest rates on the marginal lending facility and on the deposit facility were also left unchanged, at 1.75% and 0.25%, respectively. 

ECB Monetary Operations

On Monday, February 6, the ECB announced its weekly MRO.  The auction was conducted on Tuesday, February 7, and attracted bids from euro area eligible counterparties of €109.46 billion, €6.12 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, February 7, 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, February 3.  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 €344.33 billion, with the ECB allotting €219 billion, or 63.60% 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 8, 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 $4.14 billion, which were allotted in full at a fixed rate of 0.61%.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 92-day and 274-day bills maturing on May 11, 2012 and November 9, 2012, respectively. Bids of €10.1 million were submitted for the 92-day bills, with the Treasury accepting €5.65 million, while bids of €5 million were submitted for the 274-day bills, with the Treasury accepting the full amount. Since €34.15 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €23.5 million, to stand at €194.76 million.

The yield from the 92-day bill auction was 0.890%, i.e. equal to that on bills with a similar tenor issued on February 3, 2012, representing a bid price of 99.7731 per 100 nominal. The yield from the 274-day bill auction was 1.3230%, i.e. 7.6 basis points lower than on bills with a similar tenor issued on January 13, 2012 representing a bid price of 99.0031 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 May 18, 2012 and August 17, 2012, respectively.