Higher Main Refinancing Operation

On Thursday, April 21, the ECB announced its weekly Main Refinancing Operation. The auction was conducted on Tuesday, April 26, and attracted bids from euro area eligible counterparties of €117.88 billion, €20.51 billion higher 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 1.25 per cent, in accordance with current ECB policy.

On Tuesday, April 26, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €76 billion. The operation was designed to sterilise the effect of purchases made under the Securities Markets Programme that were settled but had not yet matured by the previous Friday, April 22. 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 1.25 per cent. It attracted bids amounting to €71.4 billion, with the ECB allotting the total amount bid for. Consequently, the marginal rate on the auction was set at 1.25 per cent, with the weighted average rate at 1.17 per cent.

On Wednesday, April 27, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation was carried out at a fixed rate of 1.11 per cent and once more, no bids were placed by euro area eligible counterparties.

In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on July 29, 2011. Bids of €43.25 million were submitted for the 91-day bills, with the Treasury accepting €14.25 million. Since €3.25 million worth of bills matured during the week, the outstanding balance of Treasury Bills increased by €11 million, to stand at €389.19 million.

The yield from the 91-day bill auction was 1.278 per cent, i.e. 9.2 basis points higher than on bills with a similar tenor issued on April 21, 2011, representing a bid price of 99.678 per 100 nominal.

During the week under review, there was no trading on the Malta Stock Exchange.

This week the Treasury will invite tenders for 182-day bills maturing on November 4, 2011 and for 273-day bills maturing on February 3, 2012.