On Thursday, May 2, the Governing Council of the European Central Bank (ECB) reduced the rate on its main refinancing operations (MRO) by 25 basis points to 0.50 per cent with effect from Wednesday, May 8. Furthermore, also with effect from the same date, the ECB reduced the rate on the marginal lending facility by 50 basis points to one per cent. The rate on the overnight deposits remained unchanged at zero per cent.

On the same day, the Governing Council announced its decision to continue conducting its MROs as fixed rate tender procedures with full allotment as long as necessary, and at least until July 8, 2014, the end of the sixth maintenance period of 2014. This procedure will also remain in place for the special-term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as necessary, and at least until the second quarter of 2014. The fixed rate in these operations will be equal to the MRO rate prevailing at the time.

Additionally, the Governing Council decided to conduct the three-month longer -term refinancing operations (LTRO) to be allotted on July 31, August 28, September 25, October 30, November 27 and December 18 and January 29, February 26, March 26, April 30, May 28 and June 25, 2014 as fixed rate tender procedure with full allotment. The rates in these three-month operations will be fixed at the average rate of the MROs over the life of the respective LTRO.

ECB monetary operations

On Monday, April 29, the ECB announced its weekly MRO. The auction was conducted the following day, and attracted bids from euro area eligible counterparties of €105.01 billion, €5.40 billion lower than the bid amount in the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of 0.75 per cent, in accordance with current ECB policy.

Also on Tuesday, April 30, the ECB conducted an auction for a six-day fixed-term deposit intended to absorb €202.5 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, April 26. 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 €255.81 billion, with the ECB allotting €202.5 billion or 79.16 per cent of the total bid amount. The marginal rate on the auction was set at 0.10 per cent, with the weighted average rate at 0.05 per cent.

Furthermore, on the same day, the ECB conducted an eight-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 0.62 per cent and attracted no bids from euro area eligible counterparties.

Domestic Treasury bill market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on August 2. Bids of €44.4 million were submitted, with the Treasury accepting €33.4 million. Since €12.9 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €20.5 million, to stand at €312.80 million.

The yield from the 91-day bill auction was 0.685 per cent, i.e. 1.4 basis points lower than on bills with a similar tenor issued on April 19, representing a bid price of 99.8271 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 9 and November 8, respectively.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.