Increase in outstanding amount of Treasury Bills

On Monday, January 19, the ECB announced its weekly Main Refinancing Operation (MRO). This attracted bids for €251.52 billion from euro area eligible counterparties, at a fixed rate equivalent to the prevailing main refinancing rate of two per cent.

On the same day, 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 received bids for €21.5 billion. Given that the volume of bids exceeded the intended volume of € 20 billion, participating counterparties received 93.0171 per cent of the amounts bid for.

This operation was conducted at a fixed price of -4.67 swap points. These points are based on the interest rate differential between EUR and CHF, which, as announced in a press release on October 15 last year, are calculated by using the rate applied in the ECB's MROs and the SNB's one week repo rate plus a spread of 25 basis points.

The following day, the ECB conducted a Special Term Refinancing Operation (STRO) with a maturity of 21 days.

The ECB received bids for €113.4 billion, which amount was fully allotted at a fixed rate equivalent to the ECB's main refinancing rate of two per cent.

On the same day, being the end of the reserve deposit maintenance period, the ECB also conducted an overnight liquidity-absorbing Fine Tuning Operation. This was carried out at a variable rate with a maximum rate of 2.50 per cent.

This operation received bids for €143.83 billion, with the ECB accepting €140.01 billion, or 97.34 per cent of the total amount bid for. The marginal rate on this operation was set at 2.30 per cent.

The next day, the ECB, in conjunction with the US Federal Reserve, conducted a seven-day US dollar funding operation through collateralised lending. This attracted bids for $60.3 billion, at a fixed rate of 1.20 per cent.

In parallel with this operation, the Eurosystem also offered seven-day dollar liquidity through a EUR/USD foreign exchange swap operation.

This attracted bids for $0.69 billion at a fixed price of -0.14 swap points. These were based on a US dollar interest rate of 1.20 per cent and on a EUR interest rate of 1.26 per cent. The amounts bid for in both the euro and the US dollar injection operations were allotted in full, in accordance with the ECB's press releases of October 15 and December 18.

In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on January 23. Bids for €20.85 million were submitted, with the Treasury accepting €16.48 million.

Since €2.62 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €13.86 million to €409.7 million. The yield resulting from the auction was 2.473 per cent, that is, 15.7 basis points less than that on bills with a similar tenor issued on January 16. The latest yield represented a bid price of 99.3788 per 100 nominal.

Today the Treasury will invite tenders for 90-day bills maturing on April 30.

Treasury bill trading on the Malta Stock Exchange amounted to €9.57 million during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker. Off-exchange turnover amounted to €0.41 million and was conducted by the Central Bank and other brokers.