MSE | Wednesday, 23 April 2008

Increase in 91-day Treasury bill rate

Money Market Report for the week ended 18 April 2008

Eurosystem Monetary Operations
On Monday, 14 April, the European Central Bank (ECB) announced its weekly Main Refinancing Operation (MRO). This operation attracted bids for €249.7 billion from euro area eligible counterparties. The ECB allotted €204.5 billion, or 81.9% 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 4.21%, down two basis points from the rate that resulted from the MRO of the previous week.

On Tuesday, 15 April, it being the end of the maintenance period, the ECB also launched a Fine Tuning operation. The ECB intended to absorb €21 billion through a liquidity absorbing operation, set at a fixed rate of 4%. But as bids for a total of €14.9 million only were submitted, they were fully met.

Domestic Treasury Bill Market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on 18 July 2008. The Treasury accepted in full the €16.2 million worth of bids submitted. Since €2 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by € 14.2 million to €331.8 million.
The yield resulting from the auction was 4.504%, that is 20.8 basis points higher than that on bills with a similar tenor issued on 4 April 2008. The latest yield represented a bid price of 98.8743 per 100 nominal.
On Tuesday, the Treasury invited tenders for 91-day bills maturing 25 July 2008.
Treasury bill trading on the Malta Stock Exchange amounted to only €65,100, with the Bank acting as market maker. No transactions were conducted off-Exchange.