Eurosystem Monetary Operations
The European Central Bank (ECB), on 7 January announced the weekly Main Refinancing Operation (MRO), through which the Eurosystem injects liquidity into the eurozone money market, with a standard maturity of seven days.
This liquidity providing operation attracted bids from the eurozone eligible counter-parties amounting to E283.4 billion, with the ECB allotting E151.5 billion.
The marginal rate, which is the rate at which the total tender allotment is exhausted, was set by the ECB at 4.2 per cent, and the percentage of allotment at this marginal rate was 70.6253 per cent of all bids. One Maltese counter party participated successfully in this operation, with 56.9 per cent of the amount bid, being accepted.
Treasury Bill Market
In the primary market for Treasury bills, the Treasury invited tenders for 182-day bills and 273-day bills maturing, respectively, on 11 July and 10 October 2008. Out of E38.7 million worth of bids submitted for 182-day bills, the Treasury only accepted bids for E0.7 million, while out of E42.4 million worth of bids submitted for the 273-day tenor, bids for E3.4 million were accepted. These represented the first euro-denominated Malta government securities ever issued. As E11.9 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by E7.84 million to E328.3 million.
The latest 182-day yield resulting from the auction was 4.329 per cent, down by 21.5 basis points from the 4.544 per cent registered on similar bills issued on 7 December 2007. This represented a bid price of 97.8583 per 100 nominal. The latest 273-day yield was 4.369 per cent, down by 21.4 basis points when compared with bills of a similar tenor issued on 9 November 2007. It should be pointed out, however, that the deals of 7 December and 9 November 2007 were transacted prior to the latest 25 basis point cut in official rates effected on 28 December 2007 by the Central Bank of Malta (CBM) in order to complete the process of convergence of official interest rates in Malta with those of the euro area.
On Tuesday the Treasury invited tenders for 91-day bills maturing on 18 April 2008.
Treasury bill trading on the Malta Stock Exchange during the week amounted to E3.31 million, while off-Exchange transactions amounted to E60,564. All transactions were conducted by the CBM in its role as market maker.