Money market report for week ended May 4
ECB decisions
On Thursday, May 3, the Governing Council of the ECB decided to keep the interest rate unchanged at one per cent on the main refinancing operations (MROs). Interest rates on the marginal lending facility and on the deposit facility were also left unchanged, at 1.75 per cent and 0.25 per cent, respectively.
ECB monetary operations
On Friday, April 27, the ECB announced its weekly MRO. The auction was conducted on Monday, April 30, and attracted bids from euro area eligible counterparties of €34.42 billion, €11.95 billion lower than the bid amount in the previous week. The 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 Monday, April 30, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €214 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, April 27.
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 €389.41 billion, with the ECB allotting €214 billion, or 54.96 per cent, of the total bid amount. The marginal rate on the auction was set at 0.26 per cent, with the weighted average rate also at 0.26 per cent. On Wednesday, May 2, 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 $0.53 billion, which was allotted in full at a fixed rate of 0.64 per cent.
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 August 3 and November 2 respectively. Bids of €25.93 million were submitted for the 91-day bills, with the Treasury accepting €19.93 million, while bids of €17 million were submitted for the 182-day bills, with the Treasury accepting €11 million. Since €24.74 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €6.19 million, to stand at €230.05 million.
The yield from the 91-day bill auction was 0.945 per cent, i.e. 5.4 basis points higher than that on bills with a similar tenor issued on April 27, representing a bid price of 99.7617 per 100 nominal. The yield from the 182-day bill auction was 1.116 per cent, i.e. 1.2 basis points higher than on bills with a similar tenor issued on April 27, 2012, representing a bid price of 99.4390 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 182-day bills maturing on August 10 and November 9, respectively.