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Developments in the Greek government bond market – December 2009

08/01/2010 - Press Releases

Government bond prices fell in international markets, and yields rose in December as investors became increasingly optimistic about the future prospects for global economic recovery. Yields rose particularly in the US market and in the Euro-zone "peripheral" markets. As a result, yield spreads between the Euro-zone bonds of the so-called periphery and the correspondent German bonds widened further.

On the Greek electronic secondary securities market (HDAT), Greek government bond yields rose strongly, particularly at the short end of the yield curve. The biggest rise was recorded in the 3-year benchmark bond yield that increased by 94 basis points (bps) to 3.88% at the end of December, followed by the 5-year benchmark yield that rose by 89 bps to 4.87%. As for long-term bonds, the yield on the 30-year benchmark bond rose by 39 bps to 6.22% at the end of December and on the 10-year benchmark bond by 64 bps to 5.69%. As a result, the yield curve flattened further considerably, with the difference between the 30- and the 3-year bond yields narrowing to 233 bps from 288 bps at the end of November. In addition, the average monthly spread between the Greek and the German 10-year bond yields widened to 226 bps in December from 156 bps in November.

As for benchmark bond prices, the 3-year bond price fell to 100.85 on December 31 from 102.96 at the end of November, the 10-year bond price fell to 102.15 from 107.06 and the 30-year bond price to 78.05 from 82.59, respectively.

Trading volume on HDAT in December was EUR 17.48 billion, compared with EUR 50.21 billion in November and EUR 5.45 billion in December 2008. The daily average turnover was EUR 795 million, compared with EUR 2.39 billion during the previous month. Investor interest was mainly focused on bonds with remaining maturity between 3 and 5 years, with EUR 7.9 billion worth of transactions, or 45% of the overall traded volume and also on the 10-year benchmark, which was the most actively traded bond, with EUR 6.0 billion worth of transactions. Of the 3,413 orders executed on HDAT, 44.3% were “buy” orders and 55.7% “sell” orders.



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