Developments in the Greek government bond market - September 2005
05/10/2005 - Press Releases
Οn international markets government bonds performance was
mixed during September. In the US, government bond yields increased despite the
damage caused by the hurricanes (that hit the country in August and September).
This move reflected investors' view that after a negative short-term impact on
the economy reconstruction efforts would boost growth in the medium term.
Moreover, fears of an oil-related acceleration of inflation represented a
further negative factor for government bonds. Finally, the FED increased
official interest rates by 25 basis points (bps) to 3.75% on September 20. In
the Euro-zone, government bond yields reached new historic lows in the aftermath
of the German elections and on worries related to hurricane Rita but then
increased during the last week of the month following the release of encouraging
economic data. This correction took short-term yields to higher levels than at
the end of August, while long-term yields closed the month almost unchanged.
In the Greek electronic secondary securities market (HDAT)
government bonds performance was in line with the rest of the Euro-zone markets.
Bond yields declined to new historic lows during the first three weeks of
September (with the exception of the 3-year yield), with the 10-year benchmark
bond yield falling for the first time on record to 3.21% on September 22. During
the remaining part of the month, yields rose particularly at short to
medium-term maturities with the result of a significant flattening of the curve.
More in details, at the end of September the 3-year yield closed at 2.54% from
2.45% a month earlier, the 10-year yield at 3.35% from 3.36% and the 32-year
yield at 3.90% from 3.96% respectively, after having touched a low of 3.81% on
September 22. Therefore, the yield curve flattened further, with the 3 to
32-year yield gap narrowing to 135 bps compared 152 bps in August and 163 bps in
July. Finally, the average monthly yield spread between the Greek and the German
10-year benchmark bond yields remained steady at 21 bps as in August.
Short to medium-term benchmark bond prices recorded small
losses of around 30 bps during September, while bonds with remaining maturity
between 10 and 32-years recorded gains in the range of 6 to 130 bps. The 3-year
bond price closed at 100.90 on September 30 from 101.19 on August 31 while the
10-year and the 32-year bond prices rose to 102.87 from 102.81 and to 110.85
from 109.55 respectively.
The trading volume on HDAT rose to EUR 78.73 billion worth of
transactions in September compared to EUR 55.56 billion in August. The daily
average turnover rose to EUR 3.58 billion compared to EUR 2.53 billion in
August. Investors' interest focused once again on bonds with remaining maturity
between 7 and 10 years, which absorbed EUR 45.36 billion or 58% of the overall
traded volume. The 10-year benchmark bond recorded EUR 22.79 billion worth of
transactions and the 10-year bond maturing on 20/5/2014 EUR 10.82 billion. Of
the 13,907 orders executed on HDAT 51.5% were "buy" orders and 48.5%