Developments in the Greek government bond market - January 2005
08/02/2005 - Press Releases
Government bonds continued to trade higher during January
also supported by ample liquidity on international markets. The historically low
levels of European and US bond yields pushed investors towards long-term
maturity bonds that recorded remarkable gains. As for the short-end of the yield
curve, it remained almost unchanged in Europe as market participants do not
expect any change in monetary policy by the ECB in the near future, while in the
US short-term bond yields rose in anticipation of the FED pre-announced interest
rates gradual increase. Furthermore, the mixed economic data released during the
month and the benign global inflation outlook represented a further good support
for fixed-income markets.
In the Greek electronic secondary securities market (HDAT),
the 20-year bond yield decreased by 20 basis points (bps) whereas at the short
end of the curve, the new 3-year benchmark bond yield (maturity 21/6/2008)
recorded a decline of only 1 bps from the day of issuance on January 14 until
the end of January. As a consequence the Greek yield curve became flatter during
January with respect to the previous month, following the pattern seen in the
rest of the Euro-zone markets and in the US.
Greek benchmark bond prices on HDAT rose in the range 2-272
basis points. Price gains were particularly strong at the long-end of the curve
with the 20-year benchmark bond (maturity 22/10/2022) closing at 123.00 (with a
yield of 4.05%) on January 31, from 120.28 (4.25%) at the end of December. The
10-year benchmark bond price (maturity 20/5/2014) reached the level of 106.64
(with a yield of 3.64%) at the end of January from 105.39 (3.80%) a month
earlier. The average monthly 10-year yield spread between the Greek and the
German benchmark bonds narrowed to 10 bps in January from 12 bps in December.
Market turnover on HDAT increased to EUR 80 billion in
January (with a daily average turnover of EUR 4 billion) compared to EUR 37.39
in December 2004 and to EUR 64.76 billion in January 2004, with an annual rise
of more than 20%. The most actively traded bonds were those with remaining
maturity between 7 and 10 years, which absorbed EUR 48.86 billion, corresponding
to 61% of the overall traded volume. Amongst individual bonds, the most actively
traded was the 10-year benchmark that recorded EUR 22.6 billion worth of
transactions, followed by the 15-year bond maturing on 11/1/2014 with EUR 11.9
billion. Of the 13,689 orders executed on HDAT 52.66% were "buy"
orders and 47.34% "sell" orders.