Increase in the marginal rate of the ECB's monetary operations

On Tuesday, March 25, the European Central Bank (ECB) held its weekly Main Refinancing Operation (MRO). This operation attracted bids for €302.5 billion from euro area eligible counterparties. The ECB allotted €216 billion, or 71.4 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 4.23 per cent, seven basis points higher than that of the previous week.

The same day, the ECB also announced a Longer Term Refinancing Operation (LTRO) operation through which it was prepared to inject funds for a 91-day period. This operation attracted bids for €131.3 billion from euro area eligible counterparties, with the ECB allotting €50 billion, or 38.1 per cent of the total amount bid for. The marginal rate was set by the ECB at 4.44 per cent. The previous ECB LTRO, held on March 13, resulted in a marginal rate of 4.25 per cent.

As announced in a press release on March 11, during the week the ECB, in conjunction with the Federal Reserve, provided dollar liquidity in order to contribute again to satisfying the exceptional needs for dollar funding and to facilitate the further normalisation of conditions in the money market. A total of $15 billion were allotted at a fixed exchange rate of 2.615 per cent.

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on June 27. Out of the €15.9 million worth of bids submitted, the Treasury accepted bids for €8.5 million, or 53.5 per cent of the total. At the same time €15.5 million worth of bills matured during the week, reducing the outstanding balance of Treasury bills to €340.6 million.

The yield resulting from the auction was 4.273 per cent, 10 basis points higher than that on bills with a similar tenor issued on March 14. The latest yield represented a bid price of 98.9314 per 100 nominal.

Today the Treasury will invite tenders for 28-day bills maturing May 2 and 91-day bills maturing July 4. The following week the Treasury will invite tenders for 182-days maturing on October 10.

Treasury bill trading on the Malta Stock Exchange amounted to €1.2 million during the week, with all trades being conducted by the Bank in its role as market maker. No transactions were conducted off-exchange.


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