MSE | Wednesday, 05 May 2010

ECB returns to variable rate tender procedures in regular 3-month LTROs

ECB Monetary Operations
On Monday, April 26, the European Central Bank (ECB) announced its weekly Main Refinancing Operation (MRO). This auction, which was conducted on Tuesday, attracted bids for €75.62 billion from euro area eligible counterparties, which 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 Wednesday, April 28, the ECB conducted a standard Longer-Term Refinancing Operation (LTRO) with a maturity of three months. As announced in a press release dated March 4, 2010, this operation was conducted at a variable rate, with the MRO rate being used as a minimum bid rate to avoid allotment rates being below the prevailing MRO rate. This LTRO attracted bids for € 4.85 billion, with the ECB accepting all bids. The resulting marginal rate from the operation was 1.00 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 30, 2010. Bids for €79.5 million were submitted, with the Treasury allotting €9.5 million. Since €36.61 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €27.11 million to €542.66 million.
The yield resulting from the auction was 0.544%, i.e. 0.6 basis points less than that on bills with a similar tenor issued on April 23, 2010 and a new record low. It represented a bid price of 99.8627 per 100 nominal.
Treasury bill trading on the Malta Stock Exchange amounted to €2.25 million during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker. Concurrently, the Bank also conducted a number of off-exchange transactions amounting to €0.28 million.
On Tuesday, the Treasury invited tenders for 182-day bills maturing on November 5, 2010.

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