Decrease in outstanding amount of Treasury bills

On Monday, November 24, the ECB announced its weekly Main Refinancing Operation (MRO). This attracted bids for €334.46 billion from euro area eligible counterparties, which amount was totally allotted, as pre-announced, at a fixed rate equivalent to the main refinancing rate of 3.25 per cent.

On the same day, the Eurosystem and the Swiss National Bank (SNB) conducted a EUR/CHF foreign exchange swap, with a seven-day maturity, to provide Swiss franc liquidity against the euro. This operation attracted bids for €13.67 billion, which amount was fully allotted at a fixed price of -8.23 swap points.

The next day, the ECB announced a standard Longer-Term Refinancing Operation (LTRO) with a maturity of three months. In this LTRO, the ECB received bids for €42.18 billion, which amount was fully allotted at a fixed rate equivalent to the ECB's main refinancing rate of 3.25 per cent.

The following day, the ECB, in conjunction with the US Federal Reserve, conducted a six-day US dollar funding operation through collateralised lending. This attracted bids for $84.56 billion, which amount was fully allotted at a fixed rate of 1.42 per cent. In parallel with this operation, the Eurosystem also offered six-day dollar liquidity through a EUR/USD foreign exchange swap operation which attracted bids for $0.83 billion, which amount was fully allotted at a fixed price of -2.53 swap points.

In the domestic primary market for Treasury bills, the Treasury invited tenders for 273-day bills maturing on August 28, next year. Bids for €20.89 million were submitted, with the Treasury accepting €16.89 million. Since €25.88 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €8.98 million to €358.50 million.

The yield resulting from the auction was 3.708 per cent, 100.1 basis points lower than that on bills with a similar tenor issued on October 10. This substantial decrease reflected the impact of two cuts in the ECB's minimum bid rate for main refinancing operations (MRO), each of 50 basis points, effective on October 15 and November 12, respectively. The latest yield represented a bid price of 97.2650 per 100 nominal.

Today the Treasury will invite tenders for 91-day bills maturing on March 6, and for 182-day bills maturing on June 5 next year.

Treasury bill trading on the Malta Stock Exchange amounted to €2.01 million during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker.