On Monday, September 22, the European Central Bank (ECB) announced its weekly main refinancing operation (MRO). This attracted bids for €334 billion from euro area eligible counterparties, with the ECB allotting €180 billion, or 53.8 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 4.73 per cent, up by 20 basis points from the MRO of the previous week.
The following day, the ECB launched a standard Longer-Term Refinancing Operation (LTRO) with a maturity of three months. In this LTRO, the ECB received a record total bid amount of €154.6 billion and allotted the pre-announced volume of €50 billion, or 32.3 per cent of the total amount bid for. The marginal rate on this operation was set by the ECB at 4.98 per cent, 53 basis points higher than the marginal rate resulting from the LTRO of September 10.
Given the turbulent conditions prevailing on the international money markets during the week under review, the ECB also launched an overnight liquidity-providing Fine-Tuning Operation September 24. This operation attracted bids for a total of €50.3 billion from euro area eligible counterparties, with the ECB allotting €40 billion at a marginal rate of 4.25 per cent.
On Friday, September 26, in its efforts to address the continuing pressures in the global money market, the ECB, in conjunction with other central banks (the Federal Reserve, the Bank of England and the Swiss National Bank) announced that it had introduced an additional facility whereby it would provide US dollar one week funding over the quarter-end to Eurosystem counterparties against Eurosystem-eligible collateral.
This operation would be a single rate (Dutch) auction, where the allotment interest rate applied to all satisfied bids would be equal to the marginal interest rate and would have an intended volume of USD 35 billion.
Immediately following the announcement, the ECB conducted the operation, which attracted bids for $82.5 billion from euro area eligible counterparties, with the ECB allotting the pre-announced amount of $35 billion, or 42.4 per cent of the total amount bid for. The marginal rate on the operation was 4.5 per cent.
Meanwhile, the ECB continued to provide US dollar funding via overnight operations on a daily basis throughout the week ending September 26. The marginal rate on such operations ranged between 3.25 per cent and 2.25 per cent.
However, due to the one week dollar funding operation, the intended volume of the overnight operation on September 26 was reduced to USD30 billion, from USD40 billion.
In addition, on September 2, the ECB held an auction under its 28-day Term Auction Facility (TAF) whereby in conjunction with the US Federal Reserve, it provides dollar liquidity to the markets. This operation attracted bids for $110.1 billion, of which the pre-set volume of $25 billion was allotted at a fixed rate of 3.75 per cent, equivalent to the Marginal Rate on the Federal Reserve System's tender.
In the domestic primary market for Treasury bills, the Treasury invited tenders for 182-day bills maturing on March 27, next year. Bids for €43.9 million were submitted, with the Treasury accepting €23.7 million.
Since €18.1 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €5.6 million to €408.6 million.
The yield resulting from the auction was 4.806 per cent, 3.3 basis points lower than that on bills with a similar tenor issued in the previous week. The latest yield represented a bid price of 97.6279 per 100 nominal.
Treasury bill trading on the Malta Stock Exchange amounted to €5.4 million during the week, while off-Exchange transactions amounted to €5.5 million. All trades were conducted by the Central Bank of Malta in its role as market maker.
Today, the Treasury will invite tenders for 182-day bills maturing April 3, next year.