On Monday, September 8, the European Central Bank (ECB) announced its weekly Main Refinancing Operation (MRO). This attracted bids for €223.3 billion from euro area eligible counterparties, with the ECB allotting €176.5 billion, or 79.04 per cent of the total amount bid for. The marginal rate, which is the rate at which the total tender allotment is exhausted, was set by the ECB at 4.39 per cent, unchanged from the previous week.
The following day, the ECB launched a supplementary Longer-Term Refinancing Operation (LTRO) with a maturity of three months. This operation attracted bids for €69.5 billion, with the ECB injecting €50 billion, representing 71.9 per cent of total bids. The resulting marginal rate was 4.45 per cent, which is 15 basis points lower than the marginal rate resulting from the previous three-month LTRO, that held on August 26.
On the same day, the ECB also announced a liquidity absorbing fine-tuning operation. This attracted bids for €20.14 billion from euro area eligible counterparties, with the ECB absorbing the total amount at a fixed rate of 4.25 per cent.
On Friday, September 5, the ECB announced that, in conjunction with the US Federal Reserve, it would provide dollar liquidity to the market through an 84-day Term Auction Facility (TAF). This operation attracted bids for $31.72 billion, of which $10 billion was allotted at a fixed rate of 2.67 per cent, equivalent to the Marginal Rate on the Federal Reserve System's tender. On Monday, September 8, the ECB announced another TAF operation, with a maturity of 28 days. This attracted bids for $43.34 billion, of which $10 billion was allotted at a fixed rate of 2.53 per cent. As announced in a press release dated July 30, such TAF operations will henceforth be conducted on a bi-weekly basis, alternating between operations of $20 billion for 28-day maturities and those of $10 billion for 84-day maturities.
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on December 12. Bids for €84.6 million were submitted, with the Treasury accepting only €3.4 million. Since €28.3 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €24.9 million to €401.2 million.
The yield resulting from the auction was 4.75 per cent, 4.4 basis points lower than that on bills with a similar tenor issued on September 5. The latest yield represented a bid price of 98.8136 per 100 nominal.
Today the Treasury will invite tenders for 182-day bills maturing on March 20, 2009. Treasury bill trading on the Malta Stock Exchange amounted to €3.9 million, while off-Exchange transactions amounted to €90,000. All trades were conducted by the Central Bank of Malta in its role as market maker.