Developments in the Greek government bond market - December 2004
17/01/2005 - Press Releases
Government bond markets had a positive performance in
December with only short-term securities recording small losses. European bonds
were well supported by the strength of the Euro that rose to a new historic high
of 1.3637 versus the USD on December 30. In the US, the FED increased interest
rates by a further 25 bps on December 14. This was the FED sixth move since June
2004 taking official interest rates to 2.25%.
Greek government bonds trading on the electronic secondary
securities market (HDAT) followed the performance seen in the rest of the
Euro-zone markets. Medium to long-term maturity benchmark bonds recorded gains
in the range of 33 - 208 price basis points (bps) whereas the 3-year benchmark
bond price declined 22 bps. The 10-year benchmark bond price (maturity
20/5/2014) rose to 105.39 (with a yield of 3.80%) at the end of December from
104.43 (3.92%) at the end of November. The average monthly 10-year yield spread
between the Greek and the German benchmark bonds narrowed further to 12 bps from
16 bps during November.
Bond yields fell significantly at the long end of curve
during December with 20-year yields declining 16 bps while at the short end of
the curve 3-year yields rose 7 bps. Therefore, the yield curve became
considerably flatter, with the spread between 3 and 20-year bond yields
narrowing to 156 bps from 179 bps at the end of November.
Market turnover on HDAT declined considerably during December
with respect to the previous month. Traded volume fell to EUR 37.39 billion
compared to EUR 123.51 billion in November but rose around 10% with respect to
December 2003 when it was EUR 34.02 billion. The most actively traded bonds were
those with remaining maturity between 7 and 10 years, which absorbed EUR 22.63
billion or just above 60% of the overall traded volume. Amongst individual
bonds, the most actively traded was the 10-year benchmark that recorded EUR
10.67 billion worth of transactions, followed by the 10-year bond maturing on
20/5/2013 with EUR 4.57 billion. Of the 6,412 orders executed on HDAT 50.40%
were "buy" orders and 49.60% "sell" orders.