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Developments in the Greek government bond market: April 2010

14/05/2010 - Press Releases

Government bond prices rose significantly while yields fell to historically low levels in the US and so-called core Euro-zone markets in April. On the contrary, strong losses were recorded in the rest of the Euro-zone. One major factor behind this development was the sharp decline in risk appetite on the part of investors as concerns about the fiscal situation in many countries increased considerably.

On the Greek electronic secondary securities market (HDAT), Greek government bond yields rose significantly during April, in particular at the short end of the yield curve, in line with the performance seen in the rest of the so-called peripheral Euro-zone markets. The 3-year benchmark bond yield (maturity date 20/5/2013) recorded the biggest increase, by 406 basis points (bps), to 9.84% at the end of April, followed by the 5-year benchmark bond yield that rose by 325 bps to 9.27%. At the long end of the yield curve, the 10-year benchmark bond yield rose by 245 bps to 8.93% and the 30-year benchmark bond yield by 36 bps to 7.01%. As a result, the yield curve became inverted, with the difference between the 30- and the 3-year bond yields reaching -283 bps at the end of April compared to 87 bps at the end of March. In addition, the average monthly spread between the Greek and the German 10-year bond yields widened to 474 bps in April from 311 bps in March.

As for government benchmark bond prices, the 3-year bond price fell to 86.72 at the end of April from 96.70 at the end of March, the 10-year bond price fell to 82.50 from 98.25 and the 30-year bond price to 70.00 from 73.53.

Trading volume on HDAT in April amounted to EUR 10.6 billion worth of transactions, compared to EUR 34.6 billion in March and EUR 12.3 billion in April 2009. The daily average turnover was EUR 529 million compared with EUR 1.57 billion during the previous month. The most actively traded bond was the 10-year benchmark, with EUR 1.95 billion worth of transactions. Out of 2,087 orders executed on HDAT, 73.8% were “sell” orders and 26.2% “buy” orders.

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