Money market report

ECB Monetary Operations

On Monday, July 9, the ECB announced its weekly Main Refinancing Operation.  The auction was conducted on Tuesday, July 10, and attracted bids from euro area eligible counterparties of €163.71 billion, €0.08 billion higher than the bid amount in the previous week. This was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 0.75%, in accordance with current ECB policy.

On Tuesday, July 10, the ECB conducted a Special-Term Refinancing Operation with a maturity of 28 days. This attracted bids of €24.40 billion which was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 0.75%, also in accordance with the current ECB policy.

Also on Tuesday, July 10, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €211.5 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, July 6.  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 0.75%. It attracted bids amounting to €424.81 billion, with the ECB allotting €211.5 billion, or 49.79%, of the total bid amount. The marginal rate on the auction was set at 0.03%, with the weighted average rate at 0.02%.

On Wednesday, July 11, 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 $5.14 billion, which was allotted in full at a fixed rate of 0.67%.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 28-day, 91-day and 182-day bills maturing on August 10 and October 12, 2012 and on January 11, 2013, respectively. Bids of €10.0 million were submitted for the 28-day bills, €9.0 million for the 91-day bills and €3.0 million for the 182-day bills, with the Treasury accepting the full amount in the three tenors. Since €30.0 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €8.0 million, to stand at €232.8 million.

The yield from the 28-day bill auction was 0.877%, i.e. 32.7 basis points lower than on bills with a similar tenor issued on December 2, 2011, representing a bid price of 99.9318 per 100 nominal.  The yield from the 91-day bill auction was 1.061%, i.e. 0.4 basis point lower than on bills with a similar tenor issued on July 6, 2012, representing a bid price of 99.7325 per 100 nominal.  The yield from the 182-day bill auction was 1.230%, i.e. 2.6 basis points higher than on bills with a similar tenor issued on July 06, 2012, representing a bid price of 99.3820 per 100 nominal.

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

On Tuesday, the Treasury invited tenders for 28-day, 91-day and 182-day bills maturing on August 17 and October 19, 2012 and on January 18, 2013, respectively.