Money Market Report for the week ending 1 March

ECB Monetary Operations

On Monday, 25 February, the European Central Bank (ECB) announced its weekly main refinancing operation (MRO). The auction was conducted on Tuesday, 26 February, and attracted bids from euro area eligible counterparties of €131.12bn, €1.06bn lower 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 0.75%, in accordance with current ECB policy.

On Tuesday, 26 February, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €205.5bn. 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, 22 February. 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%. It attracted bids amounting to €311.97bn, with the ECB allotting €205.5bn or 65.87% of the total bid amount. The marginal rate on the auction was set at 0.04%, with the weighted average rate at 0.03%.

On Wednesday, 27 February, the ECB conducted a threemonth 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 €8.33bn from euro area eligible counterparties, which amount was allotted in full in accordance with current ECB policy.

Furthermore, on Wednesday, 27 February, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation attracted bids of $0.38bn, which was allotted in full at a fixed rate of 0.65%.

On the same day the ECB, in conjunction with the US Federal Reserve, conducted an 84-day US dollar funding operation through collateralised lending. This attracted bids of $6.80bn, which was allotted in full at a fixed rate of 0.64%.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on 31 May. Bids of €45.55m were submitted for the bills, with the Treasury accepting only €1.5m. Since €1.75m worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €0.25m, to stand at €293.90m.

The yield from the 91-day bill auction was 0.756%, i.e. 1.3 basis points lower than on bills with a similar tenor issued on 22 February, representing a bid price of 99.8093 per 100 nominal.

During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €0.03m and was conducted by the Central Bank of Malta in its role as market maker.

On Tuesday, the Treasury invited tenders for 90-day bills maturing on 6 June.