Money market report for the week ended December 21

ECB Monetary Operations

On Monday, December 17, the European Central Bank (ECB) announced its weekly main refinancing operation (MRO). The auction was conducted on Tuesday, December 18, and attracted bids from euro area eligible counterparties of €72.68 billion, €0.53 billion lower than the bid amount in the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 0.75 per cent, in accordance with current ECB policy.

Also on Tuesday, December 18, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €208.5 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, December 14. 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 0.75 per cent. It attracted bids amounting to €354.79 billion with the ECB allotting €208.5 billion, or 58.77 per cent of the total bid amount. The marginal rate on the auction was once again set at 0.01 per cent, with the weighted average rate also set at 0.01 per cent.

On Wednesday, December 19, the ECB conducted a three-month longer-term refinancing operation to be settled as a fixed rate tender procedure with full allotment, with the rate fixed at the average rate of the MROs over the life of the operation. The auction attracted bids of €14.96 billion from euro area eligible counterparties, which amount was allotted in full, in accordance with current ECB policy.

Furthermore, on Wednesday, December 19, the ECB also conducted a 14-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation attracted bids of $0.6 billion, which was allotted in full at a fixed rate of 0.66 per cent.

Domestic Treasury bill market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on March 22, 2013. Bids of €76.53 million were submitted for the 91-day bills, with the Treasury accepting €11.25 million. Since €27.33 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €16.08 million, to stand at €203.66 million. The yield from the 91-day bill auction was 0.854 per cent, i.e. 7.8 basis points lower than on bills with a similar tenor issued on December 14, representing a bid price of 99.7846 per 100 nominal.

During the week under review, there was no trading on the Malta Stock Exchange.

Today, the Treasury will invite tenders for 90-day bills maturing on March 28.


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