On Thursday, June 10, the Governing Council of the European Central Bank (ECB) decided to keep the interest rate unchanged at one per cent on its main refinancing operations (MROs). Interest rates on the marginal lending and deposit facilities were also left unchanged, at 1.75 per cent and 0.25 per cent, respectively.
On the same day, the ECB Governing Council decided to adopt a fixed rate tender procedure with full allotment in the regular, three-month, longer-term refinancing operations (LTROS), which will be allotted on July 28, August 25 and September 29.
On Monday, June 7, the ECB announced its weekly MRO. The auction, conducted last Tuesday, attracted bids from euro area eligible counterparties of €122.04 billion, which were €4.31 billion more than the amount bid for in the previous week. The bid amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of one per cent, in accordance with current ECB policy.
Also, last Tuesday, the ECB conducted an auction for a seven-day, fixed-term deposit intended to absorb €40.5 billion. The operation was designed to sterilise the effect of purchases made under the Securities Market Programme the previous Friday, June 4. The auction, carried out at a variable rate with euro area eligible counterparties allowed to place up to two bids at a maximum rate of one per cent, attracted bids amounting to €75.63 billion. The ECB allotted the full volume of €40.5 billion, or 53.55 per cent of the total amount bid for. The marginal rate on this operation was set at 0.35 per cent, with the weighted average rate set at 0.31 per cent.
Last Wednesday, in conjunction with the US Federal Reserve, the ECB conducted a seven-day US dollar funding operation through collateralised lending. The rate for the operation was fixed at 1.20 per cent, but it did not attract any bids.
Meanwhile, in the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on September 10. Bids amounting to €62.94 million were submitted, with the Treasury accepting €22.94 million. Since €20 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €2.94 million, to stand at €569.54 million.
The yield resulting from the auction was 0.589 per cent, i.e. 5.8 basis points higher than on bills with a similar tenor issued on May 28. The yield on the bills represented a bid price of 99.8513 per 100 nominal.
Treasury bill trading on the Malta Stock Exchange amounted to €4.95 million during the week, with all trading being 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 September 17 and 182-day bills maturing on December 17.