Decrease in outstanding amount of Treasury Bills
On Monday, August 9, the ECB announced its weekly MRO. The auction was conducted last Tuesday and attracted bids from euro area eligible counterparties of €153.75 billion, €1.09 billion less than the amount bid for in the MRO held 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 current ECB policy.
On Tuesday, August 10, the ECB conducted a Special Term Refinancing Operation (STRO) with a maturity of 28 days. This attracted bids for €39.15 billion, which were allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of one per cent, also in accordance with current ECB policy.
On Tuesday, August 10, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €60.5 billion. The operation was designed to sterilise the effect of purchases made under the Securities Market Programme and settled by the previous Friday, August 6. The auction was carried out at a variable rate with euro area eligible counterparties, which were allowed to place up to two bids at a maximum rate of one per cent. It attracted bids amounting to €123.50 billion. The ECB allotted the full intended volume of €60.5 billion, or 48.99 per cent of the total amount bid for. The marginal rate on the auction was set at 0.47 per cent, with the weighted average rate standing at 0.43 per cent.
On the same day, it being the end of the reserve deposit maintenance period, the ECB also conducted an overnight Fine-tuning Liquidity Absorbing Operation. This was carried out at a variable rate, with counterparties allowed to place up to two bids at a maximum of one per cent. The operation attracted bids for €201.83 billion, with the ECB allotting the total amount bid for. The marginal rate on this operation was set at 0.80 per cent, while the weighted average rate was 0.77 per cent.
On Wednesday, August 11, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This attracted bids for $0.43 billion, which was allotted in full at a fixed rate of 1.18 per cent.
Meanwhile, in the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on November 12, 2010, and for 273-day bills maturing on May 13, 2011. Bids amounting to €81.89 million were submitted for the 91-day bills, with the Treasury accepting €3.71 million, while bids for €54.1 million were submitted for the 273-day bills, with the Treasury accepting €5.1 million. Since €50 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €41.19 million, to stand at €519.28 million.
The yield from the 91-day bill auction was 0.981 per cent, i.e. 2.3 basis points higher than on bills with a similar tenor issued on August 6, 2010.
The yield on these bills represented a bid price of 99.7526 per 100 nominal.
The yield from the 273-day bill auction was 1.274 per cent, i.e. 26.5 basis points higher than that on bills with a similar tenor issued on July 16, 2010. The yield on these bills represented a bid price of 99.0431 per 100 nominal.
During the week there was no Treasury bill trading on the Malta Stock Exchange.
Today, the Treasury will invite tenders for 91-day bills maturing on November 19, 2010.