On Monday, July 25, the ECB announced its weekly Main Refinancing Operation. The auction was conducted on Tuesday, July 26, and attracted bids from euro area eligible counterparties of €164.20 billion, €32.87 billion lower than the amount bid for in the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.50 per cent, in accordance with current ECB policy.

The following day, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €74 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, July 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 1.50 per cent. It attracted bids amounting to €93.19 billion, with the ECB allotting €74.0 billion or 79.41 per cent of the total amount bid for. The marginal rate on the auction was set at 1.16 per cent, with the weighted average rate at 1.09 per cent.

Also on July 26, the ECB announced a three-month Longer-Term Refinancing Operation to be settled as a fixed rate tender procedure with full allotment, with the rate fixed at the average rate of the MROs over the life of the operation. The auction attracted bids of €84.98 billion from euro area eligible counterparties, which amount was allotted in full, in accordance with current ECB policy.

Also on July 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 1.06 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 28-day and 91-day bills maturing on August 26, 2011 and October 28, 2011, respectively. Bids of €13 million were submitted for the 28-day bills, with the Treasury accepting only €2 million, while bids of €19.20 million were submitted for the 91-day bills, with the Treasury accepting €18.20 million. Since €29.58 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €9.38 million, to stand at €327.55 million. The yield from the 28-day bill auction was 1.400 per cent, i.e. 41.9 basis points higher than that on bills with a similar tenor issued on July 22, 2011, representing a bid price of 99.8912 per 100 nominal.

The yield from the 91-day bill auction was 1.476 per cent, i.e. 34.3 basis points higher than that on bills with a similar tenor issued on July 22, 2011, representing a bid price of 99.6283 per 100 nominal. During the week under review, there was no trading on the Malta Stock Exchange.

Today, the Treasury will invite tenders for 28-day bills and 91-day bills maturing on September 2, 2011 and November 4, 2011, respectively.