ECB Monetary Operations
On Monday, April 12, the European Central Bank (ECB) announced its weekly Main Refinancing Operation (MRO). This auction, which was conducted on Tuesday, attracted bids for €70.58 billion from euro area eligible counterparties, just €0.95 billion less 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 1.00 per cent in accordance with the current ECB policy.
On Tuesday, April 13, the ECB conducted a Special Term Refinancing Operation (STRO) with a maturity of 28 days. This attracted bids for €15.73 billion, with bids again being allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.00 per cent in accordance with the current ECB policy.
On the same day, it being the end of the reserve deposit maintenance period, the ECB also conducted an overnight Fine-tuning Liquidity Absorbing Operation. This was carried out at a variable rate, with counterparties allowed to place up to two bids at a maximum of 1.00 per cent. The operation attracted bids for €292.47 billion, of which the ECB accepted €292.29 billion, or 99.94 per cent of the total amount bid for. The marginal rate on this operation was set at 0.80 per cent, while the weighted average rate was 0.76 per cent.
Domestic Treasury Bill Market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on July 16, 2010 and 182-day bills maturing on October 15, 2010. Bids for €81.5 million were submitted for the 91-day bills, with the Treasury accepting €27.5 million, while bids for €66.45 million were submitted for the 182-day bills, with the Treasury accepting €40.45 million. Since €9.44 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €58.52 million to €605.66 million.
The yield resulting from the 91-day bill auction was 0.563 per cent, 1.3 basis points higher than that on yields with a similar tenor issued on April 9, 2010. This latest yield, which represented a bid price of 99.8579 per 100 nominal, broke the downward trend in yields on 91-day bills in evidence since the issue of October 16, 2009. But the yield resulting from the 182-day bill auction was a new record low of 0.7750 per cent, i.e. 0.3 basis points lower than that on bills with a similar tenor issued on April 9, 2010. The yield on these bills represented a bid price of 99.6097 per 100 nominal.
Treasury bill trading on the Malta Stock Exchange amounted to €12.46 million during the week, with €10.26 million trades being conducted by the Central Bank of Malta in its role as market maker. Concurrently off-exchange transactions amounted to €0.92 million, with all trades being transacted by the Central Bank of Malta broker.
On Tuesday, the Treasury invited tenders for 91-day bills maturing on July 23, 2010.
