Developments in the Greek government bond market - June 2003
16/07/2003 - Press Releases
After a strong rally until around mid June international government bonds started a phase of correction and closed the month at lower levels than at the end of May. During June, both the European Central Bank (on June 5) and the Federal Reserve (on June 25) lowered official interest rates by 50 and 25 basis points respectively.
Following the trend set in international markets, Greek government bond prices on HDAT reached their historic highs between June 13 and 17 while moving lower thereafter. At the end of June bond prices were down between 19 and 220 cents with respect to the end of May. The 20-year bond (22.10.2022), after reaching a high of 119.26 (with a yield of 4.40%) on June 17 closed the month at 114.93 (4.70%) compared to 117.13 (4.55%) at the end of May. The 10-year benchmark bond (20.5.2013) was trading at 104.96 (3.98%) on June 30 compared to 106.28 (3.82%) on May 30 while having reached a peak of 107.96 (3.62%) on June 13. The 10-year average yield spread over Bunds narrowed further to 15 basis points (bps) in June compared to 18 bps in May.
Bond yields reached historically low levels during the first half of June and then the yield curve shifted higher with respect to the end of May while steepening slightly. Yields at the short end of the curve rose less than at the long end, 6 bps versus 15 bps, as investors seem to have expected that the ECB would proceed to further interest rate reductions in the following months. Therefore, the 3- to 20-year bond yield spread widened to 218 bps at the end of June from 208 bps at the end of May. The 3-year bond yield was 2.53% on June 30 compared to 2.47% on May 30 and the 20-year bond yield was 4.70% compared to 4.55%, respectively.
Trading activity was particularly intense in June and turnover in HDAT reached EUR 61.94 billion, the highest level for the year, compared to EUR 56.21 in May billion and to EUR 41.36 billion in June 2002. Of the 10,971 orders executed on HDAT, 51.26% were “buy” orders and 48.74% “sell” orders. Investors’ interest focused on bonds with remaining maturity until 10 years that attracted 72% of the total turnover. Amongst individual bonds, the 10-year benchmark bond was the most actively traded with a volume of EUR 10.63 billion and its liquidity, as measured by the ratio of the monthly traded volume over the amount outstanding, rose to 213% in June from 161% in May.