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Government bond prices and turnover in HDAT higher in October

07/11/2001 - Press Releases

Greek government bond prices soared and turnover recorded a significant increase in the electronic secondary market (HDAT) in October. The domestic bond market profited from the favourable developments in the respective international markets where investors have resorted in search of secure returns in the wake of the terrorist attack on the US.

Long-dated bond prices registered the highest gains, between 279 and 493 price basis points (bps) (10y and 20y bonds respectively), compared with short and medium-term issues (from 20 bps the 3y to 135 bps the 7y). The 10y benchmark rose to 103.59 at the end of October from 100.80 a month earlier.

Conversely, bond yields touched historic record lows. At the end of October the 10y benchmark bond yield stood at 4.87% from 5.24% a month earlier. The average spread between the 3y (maturing 11.2.2003) and the 20y bond yield widened to 2.24% compared with 2.1% in September and 0.64% a year ago, resulting in a steeper yield curve. The average 10y spread over Bunds tightened further from 48 bps in September to 45 bps in October, dropping in several instances during the month to 42 bps for the first time.

HDAT turnover reached a new record high of EUR 31 billion, reflecting the strong interest of domestic and foreign investors in the Greek government bonds. The previous record was registered in May (EUR 28 billion), whereas in September the turnover was EUR 26 billion. In October, 53.11% of the transactions executed on HDAT were “buy” orders, as compared to the monthly average of 49.64% during the year to September. While the bonds with remaining maturity over 7 years attracted the highest buying interest (52.4% of the total “buy” orders) in October, the uncertainty caused by the tragedy in the US was reflected in a shifting of funds towards the shorter end of the yield curve. During the first 8 months of the year, on an average monthly basis 39.8% of the “buy” orders referred to bonds with maturity up to 7 years whereas in September they rose to 44.9% and in October to 47.6%.

The positive climate in the Greek government bond market was confirmed by the result of the 5y (maturing 24.3.05) bond auction where the average yield declined to 3.97% compared to 4.81% in July. Market outlook remains positive in view of the expectations for lower inflation (CPI inflation declined to 3.6% in September from 3.8% in August) and robust growth next year (according to the latest OECD forecasts, the Greek economy will grow by 4%, the highest rate in the Euro-zone).

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