Yesterday week, the European Central Bank (ECB) announced the weekly Main Refinancing Operation (MRO), through which the Eurosystem injects liquidity with a standard maturity of seven days into the eurozone money market. This liquidity providing operation attracted bids for €242 billion from eurozone eligible counterparties, with the ECB allotting €190.5 billion, or 78.7 per cent of the total amount bid for. The marginal rate, which is the rate at which the total tender allotment is exhausted, was set by the ECB at 4.16 per cent. One domestic counterparty participated successfully in this operation.
Last Tuesday, the ECB also announced a fine-tuning operation for a volume of €20 billion with a view to seeking that money market overnight rates were aligned closer to the ECB's policy rate of four per cent. This liquidity absorbing operation (which took the form of an overnight deposit) was conducted at a fixed rate of 4 per cent. Bids from eurozone eligible counterparties amounted to €45.7 billion with the percentage of allotment at the fixed rate being 43.7522 per cent. In this operation, two domestic counterparties bid successfully. In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on April 18. Out of €76 million worth of bids submitted, the Treasury only accepted bids for €2 million. As €12.7 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €10.7 million to €317.7 million.
The latest 91-day yield resulting from the auction was 4.1875 per cent, down by 16.5 basis points from the 4.352 per cent registered on similar bills issued on November 30, 2007. This represented a bid price of 98.9526 per 100 nominal. It should be pointed out, however, that the deal struck on November 30, 2007 took place prior to the latest 25 basis point cut in official rates which the Central Bank of Malta (CBM) had effected on December 28, 2007 in order to complete the process of convergence of official interest rates in Malta with those of the euro area.
Today the Treasury will invite tenders for 91-day bills maturing on April 25.
Treasury bill trading on the Malta Stock Exchange amounted to €1.7 million during the week reviewed, while off-Exchange transactions amounted to €302,938. All transactions were conducted by the CBM in its role as market maker.