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Developments in the Greek government bond market (January 2003)

10/02/2003 - Press Releases

Increased uncertainty over deepening geopolitical tensions was again the main supportive factor of government bond markets around the world in January. In addition, disappointing economic data released during the month reinforced the demand for high-quality fixed-income securities, pushing yields to fresh lows.

On the Greek electronic secondary securities market (HDAT), government bonds recorded significant gains in the range of 37-231 price basis points. The 15-year bond maturing on 11.01.2014 recorded the strongest price gains, while the 3-year bond maturing on 21.6.2005 the lowest. The price of the new 10-year benchmark bond, maturing on 20.5.2013, closed up at 102.32 with a yield of 4.31% at the end of January from 100.20 with a yield of 4.57% on the first trading day on January 14. The daily average 10-year yield spread over Bunds narrowed to 21 bps in the first two weeks of the month compared to 23 bps in December, to widen thereafter to 26 bps, after launching the new benchmark.

The yield curve moved downward steepening further as yields fell more at the short to medium part of the curve as investors forecast more interest rate cuts to come from the European Central Bank. The 3- to 20-year bond yield spread widened to 204 bps at the end of January from 199 bps at the end of December. The 3-year bond yield declined to 2.81% from 3.02% and the 20-year bond yield to 4.84% from 5.01% respectively.

HDAT turnover was higher reaching EUR 59.69 billion compared to EUR 32.59 billion in December and to EUR 42.14 billion in January 2002. Trading activity focused mainly on short to medium-term bonds attracting 62.3% of the total turnover. Amongst individual bonds, the most popular was the 10-year bond maturing on 18.5.2012, with EUR 4.49 billion worth of transactions. Of the 10,446 orders executed on HDAT, 53.04% were purchases and 46.96% sales.

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