Developments in the Greek government bond market - March 2004
08/04/2004 - Press Releases
Government bonds continued to trade higher in March on
international markets as the positive sentiment of the previous few months was
reinforced by the weak global economic data released during March and by renewed
worries about international terrorism after the bomb attack in Madrid on March
11. Job creation (announced for the month of February) in the US was modest
while in the Euro-zone economic activity remained relatively subdued and
business confidence deteriorated. All this lent support to the market view that
monetary policy is going to remain accommodative both in the US and in the Euro-zone
in the near future.
On the Greek electronic secondary securities market (HDAT)
government bonds recorded gains in line with the performance seen in the rest of
the Euro-zone bond markets. Amongst the benchmark bonds, prices rose between 30
and 110 basis points. The 20-year benchmark bond (maturing on 22/10/2022)
recorded the highest price gains closing at 113.76 (with a yield of 4.76%) at
the end of March, compared to 112.66 (4.85%) on February 27. The 10-year
benchmark bond closed at 102.43 (with a yield of 4.19%) on March 31 from 101.85
(4.27%) at the end of February. The average yield spread between the Greek and
the German 10-year benchmark bonds was unchanged at 22 bps as in February.
The yield curve shifted downwards while steepening slightly
as yields declined more at the short end of the curve than at the long. 3-year
bond yields fell to 2.69% at the end of March from 2.80% on February 27 while
20-year bond yields to 4.76% from 4.85% respectively.
Trading activity on HDAT was remarkably intense in March with
turnover reaching EUR 77.11 billion from EUR 51.38 billion in February and
compared to EUR 51.14 billion in March last year, recording an annual increase
of more than 50%. Once again, medium to long-term maturity bonds (7 to 20-year
bonds) were the most actively traded, absorbing 64% of the overall volume.
Furthermore, 50.9% of the 13,736 orders executed in HDAT during March were
"sell" orders and 49.1% "buy" orders. Amongst individual
bonds traded on HDAT, the 10-year benchmark bond recorded the highest traded
volume with EUR 19.89 billion, followed by the 10-year bond maturing on
20/5/2013 with EUR 7.74 billion. The 10-year benchmark liquidity, as measured by
the ratio of the monthly traded volume over the amount outstanding, rose to 398%
in March from 273% in February.