ECB Monetary Operations
On Thursday, 3 December, the Governing Council of the European Central Bank (ECB) decided to keep the interest rate on its main refinancing operations unchanged at 1.00 per cent. Interest rates on the marginal lending facility and the deposit facility were also left unchanged, at 1.75 per cent and 0.25 per cent, respectively.
The Governing Council of the ECB also decided to continue conducting its main refinancing operations (MROs) as fixed rate tender procedures with full allotment for as long as needed – and at least until the third maintenance period of 2010 which ends on 13 April. This tender procedure will also continue to be used in the special-term refinancing operations with a maturity of one maintenance period, which will continue for at least the first three maintenance periods of 2010.
With regards to longer-term refinancing operations in the first quarter of 2010, the Governing Council decided to discontinue the six-month longer-term operation after the last such auction on 31 March, 2010. This operation will be carried out using a full allotment fixed rate tender procedure, as will the regular monthly three-month longer-term refinancing operations already announced for the first quarter of 2010.
The Governing Council also decided that the rate in the last 12-month longer-term refinancing operation, to be allotted on 16 December, 2009, will be fixed at the average minimum bid rate of the MROs over the life of this operation.
On Monday, 30 November, the ECB announced its weekly MRO. This auction, which was conducted on Tuesday, attracted bids for e58.13 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.
Also on Monday, 30 November, the Eurosystem and the Swiss National Bank (SNB) conducted a EUR/CHF foreign exchange swap, with a seven-day maturity, to provide Swiss franc liquidity against euro. This operation attracted bids for e3.05 billion, and since this was well below the intended amount of e25 billion, all bids were allotted in full at a fixed price of -0.72 swap points.
On Wednesday, 2 December, the ECB, in conjunction with the US Federal Reserve, conducted a seven-day US dollar funding operation through collateralised lending. This attracted bids for $11.58 billion, which amount was allotted in full at a fixed rate of 1.13 per cent.
Domestic Treasury Bill Market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on 5 March, 2010 and 182-day bills maturing on 4 June, 2010. Bids for e65.78 million were submitted for the 91-day bills, with the Treasury accepting e18.16 million, while bids for e35.80 million were submitted for the 182-day bills, with the Treasury accepting e2.50 million. Since e49.67 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by e29.01 million to e505.64 million.
The yield resulting from the 91-day bill auction was 1.403 per cent, 2.5 basis points below that on bills with a similar tenor issued on 27 November, 2009. The latest yield on such bills represented a bid price of 99.6466 per 100 nominal. The yield resulting from the 182-day bill auction was 1.516 per cent, i.e. 2.2 basis points lower than that on bills with a similar tenor issued on 27 November, 2009. The yield on these bills represented a bid price of 99.2394 per 100 nominal.
On Monday the Treasury invited tenders for 91-day bills maturing on 12 March, 2010.
Treasury bill trading on the Malta Stock Exchange amounted to e3.65 million during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker. Concurrently off-exchange transactions amounted to e0.29 million, with all trades being transacted by the Central Bank of Malta broker.