Money market report

ECB Monetary Operations

On Monday, August 27, the ECB announced its weekly Main Refinancing Operation (MRO).  The auction was conducted on Tuesday, August 28, and attracted bids from euro area eligible counterparties of €131.48 billion, €0.24 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 0.75%, in accordance with current ECB policy.

On Tuesday, August 28, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €209.0 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, August 24.  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 €452.90 billion, with the ECB allotting €209.0 billion or 46.15% of the total bid amount. The marginal rate on the auction was set at 0.01%, with the weighted average rate also set at 0.01%.

On Wednesday, August 29, 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 €9.75 billion from euro area eligible counterparties, which amount was allotted in full, in accordance with current ECB policy.

Furthermore, on Wednesday, August 29, 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 $6.21 billion, which was allotted in full at a fixed rate of 0.63%.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 28-day and 91-day bills maturing on September 28 and November 30, 2012, respectively. Bids of €5.6 million were submitted for the 28-day bills, with the Treasury accepting the full amount, while bids of €20.93 million were submitted for the 91-day bills with the Treasury accepting €15.95 million. Since €17.5 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €4.05 million, to stand at €292.09 million.

The yield from the 28-day bill auction was 1.099%, i.e. 0.7 basis point lower than that on bills with a similar tenor issued on August 24, 2012, representing a bid price of 99.9146 per 100 nominal.  The yield from the 91-day bill auction was 1.211%, i.e. 0.5 basis point lower than on bills with a similar tenor issued on August 24, 2012, representing a bid price of 99.6948 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 bills and 91-day bill maturing on October 5 and December 7, 2012, respectively.