Developments in the Greek government bond market - June 2002
10/07/2002 - Press Releases
Conditions improved in international government bond markets in June
with investors moving into a "safer" haven following the successive scandals of the
accounting practices involving a series of large American corporations impairing faith in
equities. Meanwhile, the appreciation of the euro and the continuing uncertainty over the
strength of recovery in both sides of the Atlantic influenced investor expectations on
interest rates. Indeed, the European Central Bank and the Federal Reserve held rates
steady at their recent policy meetings.
Activity on the electronic market (HDAT) remained strong, albeit lower
than May record. Turnover reached EUR 41.36 billion in June compared to EUR 51.53 billion
in May and EUR 21.13 billion in June last year. Among individual bonds, the best
performers were the 5y benchmark maturing on 19.4.07 with EUR 3.93 billion and the 10y
benchmark maturing on 18.5.12 with EUR 3.44 billion. Overall, medium and long-term bonds
attracted 53% of total turnover. From the 7,727 orders executed on HDAT, 46% were
purchases and 54% sales.
Bond prices extended their gains, led by longer maturities, in the
range of 53-234 basis points (bps) compared to the previous month. The price of the 20y
benchmark maturing on 22.10.22 reached the highest level (103.450) since issued on April
20 (99.796). Conversely, the 3y bond posted the lowest gains, nonetheless also reaching
record highs (100.790) at the end of June compared to issue price (100.187) on March 15.
The 10y benchmark bond stood at 99.800, 129 bps higher than a month earlier (98.510).
Declining yields resulted in the downward, almost parallel, move of the
curve, as the 3- to 20-year spread was steady at the level seen in May (125 bps). The 3y
bond yield stood at 4.36% at the end of June down from 4.55% at the end of May and the 20y
bond yield at 5.61% down from 5.80% respectively.
The monthly average yield spread of the 10-year benchmark bond over
Bunds tightened slightly to 33 bps from 34 bps last May.