On Monday, May 20, the European Central Bank (ECB) announced its weekly main refinancing operation (MRO). The auction was conducted the following day and attracted bids from euro area eligible counterparties of €103.40 billion, €0.44 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 0.5 per cent, in accordance with current ECB policy.
Also, on Tuesday, May 21, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €201 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, May 17.
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 0.5 per cent. It attracted bids amounting to €254.15 billion, with the ECB allotting €201 billion, or 79.09 per cent, of the total bid amount. The marginal rate on the auction was set at 0.08 per cent, with the weighted average rate at 0.06 per cent.
On Wednesday, May 22, 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 0.60 per cent and attracted no bids from euro area eligible counterparties.
Furthermore, on Wednesday, May 22, the ECB, in conjunction with the US Federal Reserve, conducted an 84-day US dollar funding operation through collateralised lending. This attracted bids of $1.29 billion, which was allotted in full at a fixed rate of 0.61 per cent.
Domestic Treasury bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on August 23. Bids of €54 million were submitted, with the Treasury accepting €2 million. Since €5.4 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €3.4 million, to stand at €344.70 million.
The yield from the 91-day bill auction was 0.650 per cent, i.e. 1.5 basis points lower than on bills with a similar tenor issued on May 17, representing a bid price of 99.8360 per 100 nominal.
During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €2 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 bills maturing on August 30.