Developments in the Greek government bond market - September 2004
12/10/2004 - Press Releases
Conditions remained favourable in international government
bond markets in September after the positive performance seen during the
previous two months. Economic data released during September confirmed the loss
of growth momentum registered globally over the summer, while inflation numbers
remained relatively subdued despite persistently high oil prices. In line with
the pre-announced gradual monetary policy tightening, the FED raised interest
rates by 25 basis points on September 21, for the third time since June, a move
seen by investors as a preventive measure against future inflation.
On the Greek electronic secondary securities market (HDAT)
bond prices rose in September with the exception of the 3-year benchmark bond
that registered a marginal loss of 6 basis points (bps). Benchmark bonds with
maturity between 5 and 20-year recorded price gains in the range of 5-89 bps.
The 20-year benchmark bond (maturing on 22/10/2022) closed at 114.74 (with a
yield of 4.67%) at the end of September from 113.85 (4.74%) on August 31,
recording the highest price increase. The 10-year benchmark bond price (maturity
20/5/2014) rose to 102.32 (4.19%) on September 30 from 101.90 (4.25%) a month
earlier. The average monthly 10-year yield spread between the Greek and the
German benchmark bonds remained stable at 18 bps for the forth month running.
The increase in interest rates by the FED led to a flattening
of government bond yield curves globally as long-term bond yields fell while
short-term yields rose marginally or remained stable. In line with this trend,
the Greek yield curve became flatter as yields at the short end of the curve
(3-year maturity) rose by 1 bps while at the long end (20-year maturity)
declined by 7 bps. The spread between 3 and 20-year bond yields therefore
declined noticeably to 179 bps at the end of September from 187 bps at the end
of August.
Trading activity on HDAT was once again exceptionally intense
in September recording a new volume high of EUR 135.75 billion after EUR 96.98
billion in August and compared to EUR 65.20 billion in September 2003.The most
actively traded bonds on HDAT were those with remaining maturity between 7 and
10 years, which absorbed 63% of the overall traded volume. Amongst individual
bonds, the most traded one was the 10-year benchmark that recorded EUR 49.53
billion worth of transactions, followed by the 10-year bond maturing on
20/5/2013 with EUR 13.24 billion. Of the 23,343 orders executed in HDAT 52.42%
were "buy" orders and 47.58% "sell" orders.