Developments in the Greek government bond market - April 2004
07/05/2004 - Press Releases
The improvement in the global economic scenario in April had
a negative impact on international government bond markets. Bond prices fell as
investors started to discount the possibility of interest rate hikes in the US.
The release of strong labour market data during April supported this view.
Moreover, FED's Chairman Greenspan stated during the month that the US economy
had shown clear signs of a pick-up, pricing power was being restored and
deflation concerns were no longer an issue. Furthermore, towards the end of
April also the economic data released in the Euro-zone showed some encouraging
On the back of this international framework, Greek government
bonds traded on the electronic secondary securities market (HDAT) recorded
losses following the performance seen in the rest of the Euro-zone. Amongst the
benchmark bonds, prices fell between 98 and 257 basis points. The 20-year
benchmark bond (maturing on 22/10/2022) recorded the highest price loss
declining to 111.19 (with a yield of 4.96%) at the end of April from 113.76
(4.76%) at the end of March. The 10-year benchmark bond closed at 100.52 (with a
yield of 4.43%) on April 30 compared to 102.43 (4.19%) on March 31. The average
yield spread between the Greek and the German 10-year benchmark bonds widened
marginally to 23 bps from 22 bps during the previous two months.
The yield curve shifted upwards while becoming considerably
flatter as yields at the short end of the curve rose around 10 bps more than at
the long end, reflecting investors' perception that monetary policy in the US
might become less accommodative in the future with an impact on global bond
yields. 3-year bond yields rose to 3.0% at the end of April from 2.69% a month
earlier while 20-year bond yields rose to 4.96% from 4.76% respectively.
Market turnover on HDAT was EUR 59.98 billion compared to EUR
77.11 billion in March and to EUR 39 billion in April 2003. For the second month
in a row HDAT turnover recorded an annual increase of more than 50%. The most
actively traded bonds were those with remaining maturity between 7 and 15 years,
which absorbed 59% of the overall volume. Amongst individual bonds traded on
HDAT, the 10-year benchmark bond once again recorded the highest traded volume
with EUR 17.78 billion, followed by the 10-year bond maturing on 20/5/2013 with
EUR 4.69 billion. Of the 10,793 orders executed in HDAT during April 51.45% were
"buy" orders and 48.55% "sell" orders.