Money market report for week ended December 16

ECB decisions

On Friday, December 16, the ECB decided to conduct two one-day Fine-tuning Liquidity Providing Operations. The first operation will be allotted today and the second operation on February 28, 2012.

ECB Monetary Operations

On Monday, December 12, the ECB announced its weekly Main Refinancing Operation. The auction was conducted on Tuesday, December 13, and attracted bids from euro area eligible counterparties of €291.63 billion, €39.53 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 one per cent, in accordance with current ECB policy.

On Tuesday, December 13, the ECB conducted a Special Term Refinancing Operation with a maturity of 35 days. This attracted bids of €41.15 billion which were allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.00%, also in accordance with the current ECB policy.

Also on Tuesday, December 13, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €207.5 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, December 9. The auction was carried out at a variable rate, with euro area eligible counterparties allowed to place up to four bids at a maximum rate of one per cent. It attracted bids amounting to €241.4 billion, with the ECB allotting €207.5 billion, or 85.96 per cent, of the total amount bid for. The marginal rate on the auction was set at 0.8 per cent, with the weighted average rate at 0.49 per cent.

Furthermore, on Tuesday, December 13, being the last day of the reserve 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 €260.88 billion, with the ECB accepting €258.03 billion or 98.91 per cent. The marginal rate on the operation was set at 1.05 per cent, while the weighted average rate was 1.03 per cent.

On Wednesday, December 14, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation attracted bids of $5.12 billion, which was allotted in full at a fixed rate of 0.58 per cent.

Domestic Treasury Bill Market

In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on March 16, 2012. Bids of €36.4 million were submitted for bills, with the Treasury accepting only €0.35 million. Since €12.4 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €12.05 million, to stand at €271.1 million.

The yield from the 91-day bill auction was 1.197 per cent, i.e. 4.3 basis points lower than that on bills with a similar tenor issued on December 9, 2011, representing a bid price of 99.6983 per 100 nominal.

During the week under review, Treasury Bill trading on the Malta Stock Exchange amounted to €3.9 million and was conducted by the Central Bank of Malta in its role as market-maker.

Today, the Treasury will invite tenders for 91-day bills, maturing on March 23, 2012.


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