Money Market Report for the week ending 4 October

ECB decisions

On Wednesday, 2 October, the Governing Council of the European Central Bank (ECB) decided to keep the interest rate on the main refinancing operations (MRO) unchanged at 0.50%. Interest rates on the marginal lending facility and on the deposit facility were also left unchanged at 1% and 0.00%, respectively.

ECB Monetary Operations

On Monday, 30 September, the ECB announced its weekly MRO. The auction was conducted on Tuesday, 1 October, and attracted bids from euro area eligible counterparties of €94.47bn, €2.56bn lower than the bid amount of the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of 0.50%, in accordance with current ECB policy.

Also on Tuesday, 1 October, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €187.5bn. 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, 27 September. 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 0.50%. It attracted bids amounting to €265.07bn, with the ECB allotting €187.5bn, or 70.74%, of the total bid amount. The marginal rate on the auction was set at 0.09%, with the weighted average rate at 0.08%.

On Wednesday, 2 October, the ECB conducted a six-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation was carried out at a fixed rate of 0.59% and did not attract bids from euro area eligible counterparties.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 28-day bills and 182-day bills maturing on 1 November and 4 April 2014, respectively. Bids of €20m were submitted for the 28-day bills, with the Treasury accepting €13m, while bids of €29.5m were submitted for the 182-day bills, with the Treasury accepting €17.5m. Since €38.4m worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €7.9m, to stand at €414.75m.

The yield from the 28-day bill auction was 0.465%, i.e. 1.3 basis points higher than on bills with a similar tenor issued on 9 August, representing a bid price of 99.9638 per 100 nominal. The yield from the 182-day bill auction was 0.608%, i.e. 5.8 basis points higher than on bills with a similar tenor issued on 27 September, representing a bid price of 99.6936 per 100 nominal.

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

On Tuesday the Treasury invited tenders for 28-day bills and 182day bills maturing on 8 November and 11 April 2014, respectively.