Developments in the Greek government bond market - December 2002
10/01/2003 - Press Releases
Government bond markets ended the year with strong gains, bolstered by
sluggish economic growth, weak international equity markets and uncertainty caused by
geopolitical risks that reinforced investor interest in fixed-income securities,
especially high-rated government bonds.
On the electronic secondary securities market (HDAT), Greek government
bond prices rose significantly in December. The 20-year bond maturing on 21.10.2022
recorded the strongest price gains of 397 bps, while the 3-year bond maturing on 21.6.2005
the lowest (88 bps). The price of the 10-year benchmark bond maturing on 18.5.2012 closed
up at 106.08 at the end of December compared to 103.69 a month earlier and 99.795 at issue
The positive performance of the Greek market was reflected in the
narrowing of the yield spreads between Greek and German bonds. In particular, the average
spread of the respective 10-year bonds declined to the historical lows of 23 bps in
December from 26 bps in November and 38 bps in December 2001.
The yield curve steepened in December with respect to the previous
month with yields falling more at the short end of the curve as a consequence of the
European Central Bank’s monetary easing on 6th December. The 3- to 20-year bond yield
spread widened to 199 bps at the end of December from 188 bps at the end of November. The
3-year bond yield declined to 3.02% on 31 December from 3.42% on 29 November and the
20-year bond yield to 5.01% from 5.30% respectively. The 10-year benchmark bond yield was
down to 4.44% at the end of December 2002 from 5.28% at the end of December 2001.
Turnover on HDAT was EUR 32.59 billion in December compared to 46.89
billion in November and EUR 31.44 billion in December 2001. Overall, total HDAT turnover
reached EUR 566 billion in 2002 compared to EUR 314 billion in 2001. The daily average
turnover was EUR 2,28 billion and EUR 1,26 billion respectively.
Short to medium-term bonds attracted 77.11% of the total turnover in
December. Amongst individual bonds, the 10-year benchmark bond maturing on 18.5.2012 was
the most actively traded with EUR 4.49 billion worth of transactions, followed by the
5-year bond maturing on 19.4.2007 with EUR 3.43 billion. Of the 5,410 orders executed on
HDAT, 50.49% were purchases and 49.51% sales.