Significant drop in 91-day domestic Treasury Bill rate

On Monday, June 1, the ECB announced its weekly main refinancing operation. This attracted bids for €227.58 billion from euro area eligible counterparties, which amount was allotted in full at a fixed rate equivalent to the main refinancing rate of one per cent in accordance with the current ECB policy.

On Tuesday, June 2, the Eurosystem and the Swiss National Bank 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 €29.05 billion. As this exceeded the intended volume of €25.00 billion, participating counterparties received 86.06 per cent of the amounts bid for. This operation was conducted at a fixed price of -2.33 swap points.

On the same day, the Eurosystem, in conjunction with the US Federal Reserve, conducted a 28-day US dollar funding operation through collateralised lending. This attracted bids for $1.92 billion, which amount was allotted in full at a fixed rate of 1.21 per cent.

On Wednesday, June 3, the Eurosystem, in conjunction with the US Federal Reserve, conducted another US dollar funding operation, with a tenor of seven days. This attracted bids for $63.45 billion, which amount was allotted in full at a fixed rate of 1.20 per cent.

In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on September 4 and 182-day Bills maturing on December 4.

Bids for €63.72 million were submitted for the 91-day Bills, with the Treasury accepting €53.38 million, while bids for €47.12 million were submitted for the 182-day Bills, with the Treasury accepting €26.36 million. Since €70.59 million worth of Bills matured during the week, the outstanding balance of Treasury Bills increased by €9.16 million to €621.49 million.

The yield resulting from the 91-day Bill auction was 1.66 per cent, 21.30 basis points lower than that on Bills with a similar tenor issued on May 22. The latest yield on such Bills represented a bid price of 99.5826 per 100 nominal. The yield resulting from the 182-day Bill auction was 1.80 per cent, that is, two basis points lower than that on Bills with a similar tenor issued on May 29. The yield on these Bills represented a bid price of 99.0987 per 100 nominal.

Today the Treasury will invite tenders for 91-day Bills maturing on September 11.

Treasury Bill trading on the Malta Stock Exchange amounted to €2.70 million during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker.