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Developments in the Greek government bond market: March 2010

09/04/2010 - Press Releases

In March, government bond prices rose and yields fell in Euro-zone markets, while in the US government bonds had a negative performance. Investor confidence in the recovery of the US economy improved further in the course of the month following the release of encouraging economic data, which led to increased risk appetite. In addition, there were positive developments with regard to the fiscal outlook of the so-called peripheral Euro-zone countries.

On the Greek electronic secondary securities market (HDAT), Greek government bond yields fell significantly between the end of February and the end of March, in particular at the short end of the yield curve, with the only exception of the new 10-year benchmark bond yield (maturity date 19/6/2020) that rose to 6.48% at the end of March from 6.23% on the first day of trading in HDAT on March 8. The 3-year benchmark bond yield (maturity date 20/5/2013) recorded the biggest decline, by 83 basis points (bps), to 5.77% at the end of March, followed by the 5-year benchmark bond yield that fell by 61 bps to 6.03%, while the 30-year benchmark bond yield fell by 2 bps to 6.64%. As a result, the yield curve steepened further considerably as the difference between the 30- and the 3-year bond yields amounted to 87 bps at the end of March from 35 bps at the end of February. In addition, the average monthly spread between the Greek and the German 10-year bond yields narrowed to 311 bps in March compared to 327 bps in February.

As for benchmark bond prices, the 3-year bond price rose to 96.70 at the end of March from 94.34 at the end of February, the new 10-year bond price fell to 98.25 at the end of March from 100.10 on March 8, whereas the 30-year bond price rose to 73.53 from 73.29.

In the course of the month there was a significant increase in trading activity, with trading volume on HDAT rising to EUR 34.61 billion worth of transactions in March, compared with EUR 18.86 billion in February and EUR 16.24 billion in March 2009. The daily average turnover was EUR 1.57 billion, compared with EUR 992 million during the previous month. The most actively traded bond was the 5-year benchmark, with EUR 7.7 billion worth of transactions, followed by the previous 3-year benchmark (maturity date 20/3/2012) with EUR 6.5 billion worth of transactions. Of the 6,785 orders executed on HDAT, 43.8% were “buy” orders and 56.2% “sell” orders.

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