Money market report

ECB decisions

On Wednesday, June 6, 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 and on the deposit facilities were also left unchanged, at 1.75% and 0.25%, respectively.

On the same day, the Governing Council announced its decision to continue conducting its MROs as fixed rate tender procedures with full allotment as long as necessary, and at least until January 15, 2013, the end of the twelfth maintenance period of 2012. This procedure will also remain in place for the special-term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as necessary. The fixed rate in these operations will be the same as the MRO rate prevailing at the time.

Additionally, the Governing Council decided to conduct the three-month Longer Term Refinancing Operations (LTRO) to be allotted on July 25, August 29, September 26, October 31, November 28 and December 19, 2012 as fixed rate tender procedure with full allotment. The rate in these three-month operations will be fixed at the average rate of the MROs over the life of the respective LTRO. 

ECB Monetary Operations

On Monday, June 4, the ECB announced its weekly MRO.  The auction was conducted on Tuesday, June 5, and attracted bids from euro area eligible counterparties of €119.37 billion, €68.19 billion higher than the bid amount in the previous week. The 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, June 5, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €212.0 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, June 1.  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 €420.65 billion, with the ECB allotting €212.0 billion, or 50.4% of the total bid amount. The marginal rate on the auction was set at 0.26%, with the weighted average rate at 0.26%.

On Wednesday, June 6, 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 $1.54 billion, which was allotted in full at a fixed rate of 0.66%.

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 September 7 and December 7, 2012, respectively. Bids of €8.15 million were submitted for the 91-day bills, with the Treasury accepting the full amount, while there were no bid submissions for the 182-day bills. Since €9.75 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €1.6 million, to stand at €265.85 million.

The yield from the 91-day bill auction was 0.964%, i.e. 7.5 basis points lower than that on bills with a similar tenor issued on June 1, 2012, representing a bid price of 99.7569 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 September 14, and December 14, 2012, respectively.