On Monday, May 24, the European Central Bank (ECB) announced its weekly main refinancing operation (MRO). This auction, which was conducted last Tuesday, attracted bids for €106.01 billion from euro area eligible counterparties, €1.26 billion more than the amount bid for in the previous week. The bid amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of one per cent in accordance with the current ECB policy.
The following day, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €26.5 billion. This operation was designed to sterilise the effect of the amount of purchases under the Securities Market Programme that were settled by May 21. This auction was carried out at a variable rate, with counterparties allowed to place up to two bids at a maximum rate of one per cent. This operation attracted bids amounting to €86 billion from euro area eligible counterparties. The ECB allotted the full intended volume of €26.5 billion, or 30.81 per cent of the total amount bid for. The marginal rate on this operation was set at 0.28 per cent, while the weighted average rate was 0.27 per cent.
The next day, the ECB conducted a standard Longer-Term Refinancing Operation (LTRO) with a maturity of 91 days. This operation attracted bids for €12.16 billion, which amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of one per cent in accordance to the press release dated May 10.
On the same day, the ECB, in conjunction with the US Federal Reserve, conducted a seven-day US dollar funding operation through collateralised lending. This attracted bids for $5.4 billion, which amount was allotted in full at a fixed rate of 1.23 per cent.
Meanwhile, in the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on August 27 and for 182-day bills maturing on November 26. Bids for €28.2 million were submitted for the 91-day bills, with the Treasury accepting €2.7 million, while bids for €39.95 million were submitted for the 182-day bills, with the Treasury accepting €7.95 million. Since €27.38 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €16.73 million to €583.21 million.
The yield resulting from the 91-day bill auction was 0.531 per cent, 0.9 basis points lower than that on yields with a similar tenor issued on May 21. The yield on these bills represented a bid price of 99.8660 per 100 nominal. The yield resulting from the 182-day bill auction was 0.667 per cent, i.e. 4.2 basis points lower than that on bills with a similar tenor issued on May 21. The yield on these bills represented a bid price of 99.6639 per 100 nominal.
Treasury Bill trading on the Malta Stock Exchange amounted to €13.87 million during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker.
Last Tuesday, the Treasury invited tenders for 91-day bills maturing on September 3 and 273-day bills maturing on March 4, 2011.