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Strong price perfomance of the Greek government bonds in July 2001

06/08/2001 - Press Releases

During the month of July the prices of the Greek government bonds continued the recovery seen in June in line with the generally positive climate in international bond markets. Trading activity in the Electronic Secondary Securities Market (HDAT) slowed down slightly due to the summer period with the turnover declining to EUR 19,211 million from EUR 21,127 million in June.

The long end of the yield curve saw particularly strong gains with prices surging between 127 and 191 price basis points in the 10y-20y maturities. This positive performance was favoured by continued evidence, during the month, that the international economic slowdown is not yet reaching a halt. Therefore, international markets are expecting further interest rate cuts to come in the near future.

The 10-year benchmark bond (maturing 18/5/2011) closed at 99.86 (yielding 5.37%) on HDAT in July compared with 98.59 (5.54%) in June. The average yield spread over the Bund widened to 49 basis points (bps) from 46 bps respectively.

The short end of the yield curve was relatively stable as the European Central Bank (ECB) kept its monetary policy unchanged. Price gains, ranging between 4 and 58 bps, were more moderate for bonds with maturity between 3 and 7 years.

The fact that the Greek economy is growing faster than the European average and fiscal consolidation is proceeding, combined with the established market expectations for lower interest rates, has set the basis for these positive developments.

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