Decrease in outstanding amount of Treasury bills

On Monday, May 31, the European Central Bank (ECB) announced its weekly main refinancing operation (MRO). This auction, conducted on June 1, attracted bids for €117.73 billion from euro area eligible counterparties, which were €11.72 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.

Also, on June 1, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €35 billion. The operation was designed to sterilise the effect of purchases settled by the previous May 28 which were made under the Securities Market Programme. The auction, carried out at a variable rate with counterparties allowed to place up to two bids at a maximum rate of one per cent, attracted bids amounting to €73.58 billion from euro area eligible counterparties. The ECB allotted the full intended volume of €35 billion or 47.57 per cent of the total amount bid for. The marginal rate on this operation was set at 0.28 per cent, with the weighted average rate also set at the same rate.

On June 2, in conjunction with the US Federal Reserve, the ECB conducted a seven-day US dollar funding operation through collateralised lending. The rate for the operation was fixed at 1.21 per cent, but it did not attract any bids.

Meanwhile, in the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on September 3, 2010, and for 273-day bills maturing on March 4, 2011. Bids amounting to €36.3 million were submitted for the 91-day bills, with the Treasury taking up no bids, while bids for €69.04 million were submitted for the 273-day bills, with the Treasury accepting €19.85 million. Since €36.45 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €16.6 million to stand at €566.61 million.

The yield resulting from the 273-day bill auction was 0.738 per cent, i.e. 2.8 basis points lower than that on bills with a similar tenor issued on May 14. The yield on these bills represented a bid price of 99.4435 per 100 nominal.

No Treasury bill trading took place last week on the Malta Stock Exchange.

Today, the Treasury will invite tenders for 91-day bills maturing on September 10.