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Increase in outstanding amount of Treasury Bills

On December 6, the ECB announced its weekly MRO. The auction was conducted on December 7, and attracted bids from euro area eligible counterparties of €197.28 billion, €17.59 billion more than the amount bid for the previous week. The bid amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.00 per cent, in accordance with current ECB policy.

On December 7, the ECB conducted a Special Term Refinancing Operation (STRO) with a maturity of 42 days. This attracted bids of €68.07 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 conducted an auction for a seven-day fixed-term deposit intended to absorb €69 billion. The operation was designed to sterilise the effect of purchases made under the Securities Market Programme and settled by December 3. The auction was carried out at a variable rate, with euro area eligible counterparties allowed to place up to two bids at a maximum rate of one per cent. It attracted bids of €98.34 billion, with the ECB allotting the full intended volume of €69 billion, or 70.16 per cent of the total amount bid for. The marginal rate on the auction was set at 0.72 per cent, with the weighted average rate standing at 0.65 per cent.

On December 7, the last day of the reserve deposit maintenance period, the ECB conducted an overnight Fine-tuning Liquidity Absorbing Operation 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 of €147.05 billion, with the ECB accepting the total amount bid for. The marginal rate on the operation was set at 0.80 per cent, while the weighted average rate was 0.79 per cent.

On December 8, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This attracted bids of $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 March 11, 2011. Bids of €94.88 million were submitted, with the Treasury accepting €19.58 million. Since €14.94 million worth of bills matured during the week, the outstanding balance of Treasury Bills increased by €4.63 million, to stand at €415.9 million. The yield from the 91-day bill auction was 0.802 per cent, i.e. 2.3 basis points lower than on bills with a similar tenor issued on November 26, 2010, representing a bid price of 99.7977 per 100 nominal.

Treasury Bill trading on the Malta Stock Exchange amounted to €4.48 million during the week, with all trading being conducted by the Central Bank of Malta in its role as market maker. Concurrently, all off-exchange trading amounting to €0.08 million were also all transacted by the Central Bank of Malta.

Today the Treasury will invite tenders for 91-day bills maturing on March 18, 2011 and 182-day bills maturing on June 17, 2011.

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