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Money market report for week ended June 17

ECB Monetary Operations

On Monday, June 13, the ECB announced its weekly MRO. The auction was conducted on Tuesday, June 14, and attracted bids from euro area eligible counterparties of €135.58 billion, €33.14 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 June 14, the ECB conducted a Special Term Refinancing Operation (STRO) with a maturity of 28 days. This attracted bids of €69.40 billion, which were allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.25 per cent, also in accordance with the current ECB policy.

Also, on the same day, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €75 billion. This operation is 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, June 10. 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 €76.71 billion, with the ECB allotting €75 billion or 97.70 per cent of the total amount bid for. The marginal rate on the auction was set at 1.25 per cent, with the weighted average rate at 1.20 per cent.

On Tuesday, June 14, being the last day of the reserve deposit maintenance period, the ECB conducted an overnight Fine-tuning Liquidity Absorbing Operation at a variable rate, with counterparties allowed to place up to two bids at a maximum rate of 1.25 per cent. The operation attracted bids of €35.16 billion, with the ECB accepting €29.62 billion or 84.24 per cent of the total amount bid for. The marginal rate on the operation was set at 1.05 per cent, while the weighted average rate was 1.04 per cent.

On Wednesday, June 15, 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 1.10 per cent and, once more, no bids were placed by euro area eligible counterparties.

Domestic Treasury Bill Market

In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day and 182-day bills maturing on September 16, and December 16, 2011 respectively. Bids of €14.82 million were submitted for the 91-day bills, with the Treasury accepting €5.0 million, while bids of €11.0 million were submitted for the 182-day bills, with the Treasury declining all bids. Since €9.63 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €4.63 million, to stand at €344.53 million.

The yield from the 91-day bill auction was 1.130 per cent, i.e. 2.7 basis points lower than that on bills with a similar tenor issued on June 10, 2011, representing a bid price of 99.7152 per 100 nominal.

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

Today the Treasury will invite tenders for 91-day bills and 273-day bills, maturing on September, 23, 2011 and March 23, 2012, respectively.

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