On Monday, March 31, the European Central Bank (ECB) announced its weekly main refinancing operation. This operation attracted bids for €283.7 billion from euro area eligible counterparties. The ECB allotted €150 billion, or 52.9 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 4.21 per cent, down two basis points from the rate that resulted from the MRO of the previous week.
On Tuesday, April 1, the ECB also announced a longer term refinancing operation, through which it was prepared to inject funds for a 189-day period. This attracted bids for €103.1 billion from euro area eligible counterparties, with the ECB allotting €25 billion, or 24.2 per cent of the total amount bid for.
The marginal rate was set by the ECB at 4.55 per cent. This was the first of a number of six-month LTROs that the ECB will be holding in order to further consolidate the progress made so far in the normalisation of euro area money markets. The six-month LTROs will complement the standard three-month LTROs that the ECB conducts on a monthly basis.
On Friday, April 4, the ECB also announced that, in conjunction with the Federal Reserve, it will once again be providing dollar liquidity through the Term Auction Facility (TAF) in order to help satisfy the exceptional demand for dollar funding and to facilitate the normalisation of conditions in the international money market.
In the domestic primary market for Treasury bills, the Treasury invited tenders for 28-day bills maturing on May 2 and 91-day bills maturing on July 4. Out of the €13.9 million worth of bids submitted for the 28-day bills, the Treasury accepted bids for €8.7 million, while out of the €22.8 million bids submitted for the 91-day bills, the Treasury accepted €18.8 million. Since €51 million worth of bills matured during the week, the outstanding balance of Treasury bills fell by €23.5 million to €317.1 million.
The yield resulting from the 28-day auction was 4.245 per cent, 6.6 basis points higher than that on bills with a similar tenor issued on March 7. The latest yield represented a bid price of 99.6709 per 100 nominal. Meanwhile, the yield resulting from the 91-day bill auction was 4.296 per cent, 2.3bps higher than that on bills with a similar tenor issued on March 28. This reflected a bid price of 98.9257 per 100 nominal.
Today, the Treasury will invite tenders for 182-day bills maturing October 10. The following week the Treasury will invite tenders for 91-days maturing July 18.
Treasury bill trading on the Malta Stock Exchange amounted to €1.7 million during the week, with all trades being conducted by the Bank in its role as market maker. No transactions were conducted off-exchange.