ECB announces increase in MRO bids

On November 15, the ECB announced its weekly MRO. The auction was conducted on November 16, and attracted bids from euro area eligible counterparties of €186.03 billion, €11 billion more than the amount bid for 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. On November 16, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €65 billion. The operation was designed to sterilise the effect of purchases made under the Securities Market Programme and settled by November 12. The auction was 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. It attracted bids of €80.76 billion, with the ECB allotting the full intended volume of €65 billion, or 80.49 per cent of the total amount bid for. The marginal rate on the auction was set at 0.73 per cent, with the weighted average allotment rate standing at 0.63 per cent.

On November 17, the ECB conducted an eight-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This attracted bids of $0.06 billion, which was allotted in full at a fixed rate of 1.19 per cent.

In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on February 18, 2011. Bids of €98.36 million were submitted, with the Treasury accepting just €4 million. Since €23.3 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €19.3 million, to stand at €434.43 million.

The yield from the 91-day bill auction was 0.910 per cent, i.e. 4.8 basis points higher than on bills with a similar tenor issued on October 22, representing a bid price of 99.7705 per 100 nominal.

Treasury Bill trading on the Malta Stock Exchange amounted to €2.4 million during the week, all trading being conducted by the Central Bank of Malta in its role as market maker.

On Tuesday, the Treasury invited tenders for 28-day bills maturing on December 24 and 91-day bills maturing on February 25, 2011.


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