Outstanding amount of Treasury Bills declines

On Monday, September 6, the ECB announced its weekly MRO. The auction was conducted the next day and attracted bids from euro area eligible counterparties of €153.65 billion, just €0.59 billion more 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.

That same day, the ECB conducted a Special Term Refinancing Operation (STRO) with a maturity of 35 days. This attracted bids for €37.90 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 the same day, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €61 billion. The operation was designed to sterilise the effect of purchases made under the Securities Market Programme and settled by the previous Friday, September 3. 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 €104.49 billion. The ECB allotted the full intended volume of €61 billion, or 58.38 per cent of the total amount bid for. The marginal rate on the auction was set at 0.39 per cent, with the weighted average rate standing at 0.33 per cent.

September 7 being the last day 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 €175.43 billion, with the ECB allotting the total amount bid for. The marginal rate on the operation was set at 0.80 per cent, while the weighted average rate was 0.77 per cent.

On September 8, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This attracted bids for $0.06 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 December 10. Bids amounting to €42.76 million were submitted, with the Treasury accepting just €2.69 million. Since €22.94 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €20.24 million, to stand at €501.59 million.

The yield resulting from the auction was 0.7 per cent, i.e. 0.1 basis points higher than on bills with a similar tenor issued on September 30, 2010. The yield on the bills represented a bid price of 99.8234 per 100 nominal.

Treasury Bill trading on the Malta Stock Exchange amounted to €4.02 million during the week, with all trading being conducted by the Central Bank of Malta in its role as market maker. Concurrently, off-exchange transactions amounting to €0.18 million were also all transacted by the Central Bank of Malta.

Today, the Treasury will invite tenders for 91-day bills maturing on December 17.