On Thursday, December 6, the Governing Council of the ECB decided to keep the interest rate on the main refinancing operations (MRO) unchanged at 0.75 per cent. Interest rates on the marginal lending facility and on the deposit facility were also left unchanged, at 1.50 per cent and zero per cent, respectively.
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 9, 2013, the end of the sixth maintenance period of 2013. 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. The fixed rate in these operations will be the same as 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 January 30, February 27, March 27, April 24, May 29 and June 26, 2013 as fixed rate tender procedure with full allotment. The rate 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, December 3, the ECB announced its weekly MRO. The auction was conducted on Tuesday, December 4, and attracted bids from euro area eligible counterparties of €70.76 billion, €3.83 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, December 4, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €208.5 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, November 30. 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 €415.86 billion with the ECB allotting €208.5 billion, or 50.14 per cent of the total bid amount. The marginal rate on the auction was once again set at 0.01 per cent, with the weighted average rate also set at 0.01 per cent.
On Wednesday, December 5, 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 $4.08 billion, which was allotted in full at a fixed rate of 0.66 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 $3.03 billion, which amount 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 181-day bills maturing on March 8 and June 6, respectively. Bids of €68.7 million were submitted for the 91-day bills with the Treasury accepting €13.6 million, while bids of €37 million were submitted for the 181-day bills, with the Treasury accepting €5 million.
Since €32.76 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €14.16 million, to stand at €239.45 million.
The yield from the 91-day bill auction was 0.995 per cent, i.e. 3.8 basis points lower than that on bills with a similar tenor issued on November 30, representing a bid price of 99.7491 per 100 nominal. The yield from the 181-day bill auction was 1.165 per cent, i.e. 19 basis points lower than on bills with a similar tenor issued on September 28 representing a bid price of 99.4177 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 March 15 and June 14 respectively.