ECB introduces 84-day USD Term Auction Facility

On Monday, August 11, the European Central Bank (ECB) announced its weekly Main Refinancing Operation (MRO). This attracted bids for €233.4 billion from euro area eligible counterparties, with the ECB allotting €176 billion, or 75.41 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 4.37 per cent, one basis points lower than the marginal rate resulting from the MRO of the previous week.

The follwoign day, the ECB launched a supplementary Longer-Term Refinancing Operation (LTRO) with a maturity of 91 days. This operation attracted bids for €78.9 billion from euro area eligible counterparties, with the ECB allotting €50 billion, or 63.35 per cent of the total amount bid for. The marginal rate resulting from this operation was 4.61 per cent, 11 basis points higher than the marginal rate resulting from the previous 3-month LTRO, that of June 24.

On the same day, being the end of the maintenance period, the ECB also launched a liquidity absorbing Fine-Tuning Operation. This attracted bids for €22.6 billion from euro area eligible counterparties, with the ECB allotting € 21 billion. These deals were conducted at a fixed rate of 4.25 per cent.

Following a press release issued on July 30, the Governing Council of the ECB announced that, in conjunction with the US Federal Reserve, it was introducing 84-day operations under the Term Auction Facility (TAF) to provide dollar liquidity to the market, while continuing to conduct operations with a maturity of 28 days. These operations are conducted to help satisfy the exceptional need for dollar funding and to facilitate the further normalisation of conditions in the international money market. The ECB will conduct bi-weekly TAF operations, alternating between operations with maturities of 28 days and those with maturities of 84 days. As a result, during a transition period spanning August to September, the ECB will be reducing the amount of 28-day TAF operations along with the introduction of 84-day operations.

On Friday, August 8 the ECB, in conjunction with the US Federal Reserve, announced the first 84-day TAF operation. This attracted bids for $38.5 billion, of which €10 billion were allotted at a fixed rate of 2.754 per cent, equivalent to the marginal rate on the Federal Reserve System's tender.

On Monday, August 11 the ECB also announced a 28-day TAF operation. This attracted bids for $91.1 billion, of which $20 billion were allotted at a fixed rate of 2.45 per cent.

In the domestic primary market for Treasury bills, the Treasury invited tenders for 92-day bills maturing on November 14. Bids for €50.14 million were submitted, with the Treasury accepting €11.24 million.

Since €29.34 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €18.1million to €419.95 million.

The yield resulting from the auction was 4.90 per cent, 0.8 basis points lower than that on bills with a similar tenor issued on August 8. The latest yield represented a bid price of 98.7633 per 100 nominal.

Today the Treasury will invite tenders for 91-day bills maturing on November 21 this year, and the following week it will invite tenders for 182-day bills maturing on February 27, next year.

Treasury bill trading on the Malta Stock Exchange amounted to €1.52 million, with all trades being conducted by the Bank in its role as market maker.

Off-Exchange transactions amounted to €65,000