On Thursday, August 1, the Governing Council of the European Central Bank (ECB) decided to keep the interest rate on the main refinancing operations (MRO) unchanged at 0.50 per cent. Interest rates on the marginal lending facility and on the deposit facility were also left unchanged at one per cent and zerp per cent, respectively.
ECB monetary operations
On Monday, July 29, the ECB announced its weekly MRO. The auction was conducted the following day and attracted bids from euro area eligible counterparties of €109.16 billion, €6.86 billion higher than the bid amount of the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of 0.50 per cent, in accordance with current ECB policy.
Also on Tuesday, July 30, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €195.5 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 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 0.50 per cent. It attracted bids amounting to €229.88 billion, with the ECB allotting €195.5 billion, or 85.04 per cent, of the total bid amount. The marginal rate on the auction was set at 0.20 per cent, with the weighted average rate at 0.13 per cent.
On Wednesday, July 31, the ECB conducted 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 €2.68 billion from euro area eligible counterparties, which amount was allotted in full in accordance with current ECB policy.
Also on Wednesday, July 31, the ECB conducted a six-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 0.60 per cent and did not attract 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 and 273-day bills maturing on November 1, and May 2, 2014, respectively. Bids of €39.76 million were submitted for the 91-day bills, with the Treasury accepting €31.4 million, while bids of €69 million were submitted for the 273-day bills, with the Treasury accepting €35 million. Since €43.72 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €22.68 million, to stand at €302.85 million.
The yield from the 91-day bill auction was 0.468 per cent, i.e. 0.1 basis point higher than on bills with a similar tenor issued on July 26, representing a bid price of 99.8818 per 100 nominal. The yield from the 273-day bill auction was 0.645 per cent, i.e. 21.0 basis points lower than on bills with a similar tenor issued on February 22, representing a bid price of 99.5133 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 273-day bills maturing on September 6 and May 9, 2014, respectively.