Developments in the Greek government bond market - May 2004
07/06/2004 - Press Releases
Government bonds traded considerably lower on international
markets during the first half of May taking the lead from the US, though they
recovered partially during the second part of the month. Strong US economic data
and the FED's statement at its May 4 meeting had a significant negative impact
on bond markets. Although the FED left interest rates unchanged, it signaled
that it is ready to remove its accommodative monetary policy at a gradual pace.
Later in the month, renewed fears of terrorist attacks and the continuing
increase in oil prices (that reached an historic high of USD 41.55 a barrel in
the 21 years of trading on the exchange), with its potential detrimental impact
on global economic growth, led government bond prices higher. This contributed
to contain the losses recorded during the month.
Greek government bonds traded on the electronic secondary
securities market (HDAT) had a negative performance in line with the
developments on international bond markets. Amongst the benchmark bonds, prices
fell between 19 and 71 basis points. The price of the 20-year benchmark bond (maturing
on 22/10/2022) recorded the highest decline falling to 110.48 (with a yield of
5.01%) at the end of May from 111.19 (4.96%) at the end of April. The 10-year
benchmark (maturing on 20/5/2014) bond price was 100.00 (with a yield of 4.49%)
at the end of May compared to 100.52 (4.43%) a month earlier.
Bond yields rose for all maturities and the yield curve
became marginally flatter during May. More in details, bond yields for medium-term
maturities (5- to 7-year) showed the highest increase of 7 bps, while 3-year
yields rose 6 bps to 3.06% and 20-year yields 5 bps to 5.01%. Finally, the
average yield spread between the Greek and the German 10-year benchmark bonds
narrowed to 22bps in May from 23 bps in April.
Market turnover on HDAT rose to EUR 61.83 billion in May
after EUR 59.98 billion in April and compared to EUR 56.21 billion in May 2003.
As in April, the most actively traded bonds on HDAT were those with remaining
maturity between 7 and 15 years, which absorbed 60% of the overall volume.
Amongst individual bonds, the 10-year benchmark bond recorded the highest traded
volume with EUR 20.46 billion, followed by the 10-year bond maturing on
20/5/2012 with EUR 4.86 billion. Of the 11,016 orders executed in HDAT during
May 51.13% were "buy" orders and 48.87% "sell" orders.