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Money market report for week ended July 20

ECB monetary operations

On Monday, July 16, the ECB announced its weekly Main Refinancing Operation. The auction was conducted on Tuesday, July 17, and attracted bids from euro area eligible counterparties of €156.75 billion, €6.96 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 0.75 per cent, in accordance with current ECB policy.

On Tuesday, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €211.5 billion. This 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, July 13. 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 0.75 per cent. It attracted bids amounting to €440.14 billion, with the ECB allotting €211.5 billion or 48.05 per cent of the total bid amount. The marginal rate on the auction was set at 0.02 per cent, with the weighted average rate at 0.02 per cent.

On Wednesday, July 18, 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 $4.23 billion, which was allotted in full at a fixed rate of 0.67 per cent.

On the same day, the ECB, in conjunction with the US Federal Reserve, conducted an 84-day US dollar funding operation through collateralised lending. This attracted bids of $2.80 billion, which amount was allotted in full at a fixed rate of 0.66 per cent.

Domestic Treasury bill market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 28-day, 91-day and 182-day bills maturing on August 17 and October 19 and on January 18, 2013, respectively. Bids of €13.5 million were submitted for the 28-day bills with the Treasury accepting €11.5 million.

Additionally, bids of €22.23 million were submitted for the 91-day bills and €14 million for the 182-day bills, with the Treasury accepting the full amount in both tenors. Since €16.75 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €30.98 million, to stand at €263.78 million.

The yield from the 28-day bill auction was one per cent, i.e. 12.3 basis points higher than on bills with a similar tenor issued on July 13, representing a bid price of 99.9223 per 100 nominal. The yield from the 91-day bill auction was 1.052 per cent, i.e. 0.9 basis point lower than on bills with a similar tenor issued on July 13 representing a bid price of 99.7348 per 100 nominal.

The yield from the 182-day bill auction was 1.229 per cent, i.e. 0.1 basis point lower than on bills with a similar tenor issued on July 13, representing a bid price of 99.3825 per 100 nominal.

During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €0.23 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 and 182-day bills maturing on October 26, and on January 25, 2013, respectively.

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