Money market report

ECB Monetary Operations

On Monday, July 23, the ECB announced its weekly Main Refinancing Operation (MRO).  The auction was conducted on Tuesday, July 24, and attracted bids from euro area eligible counterparties of €130.67 billion, €26.08 billion lower than the bid amount of the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 0.75%, in accordance with current ECB policy.

Also on Tuesday, July 24, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €211.5 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, July 20.  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 €397.54 billion, with the ECB allotting €211.5 billion, or 53.20% of the total bid amount. The marginal rate on the auction was set at 0.02%, with the weighted average rate at 0.01%.

On Wednesday, July 25, the ECB conducted a three-month Longer-Term Refinancing Operation to be settled as a fixed rate tender procedure with full allotment, with the rate fixed at the average rate of the MROs over the life of the operation. The auction attracted bids of €8.45 billion from euro area eligible counterparties, which amount was allotted in full, in accordance with current ECB policy.

Furthermore, on Wednesday, July 25, 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 $8.02 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 October 26, 2012 and January 25, 2013, respectively. Bids of €30.55 million were submitted for the 91-day bills with the Treasury accepting €29.55 million, while bids of €14.0 million were submitted for the 182-day bills with the Treasury accepting €10.0 million. Since €26.6 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €12.96 million, to stand at €276.74 million.

 The yield from the 91-day bill auction was 1.080%, i.e. 2.8 basis points higher than on bills with a similar tenor issued on July 20, 2012, representing a bid price of 99.7277 per 100 nominal.  The yield from the 182-day bill auction was 1.208%, i.e. 2.1 basis points lower than on bills with a similar tenor issued on July 20, 2012, representing a bid price of 99.3930 per 100 nominal. 

During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €1.0 million and was conducted by the Central Bank of Malta in its role as market-maker.

On Tuesday, the Treasury invited tenders for 28-day bills and 91-day bills maturing on August 31 and November 2, 2012, respectively.