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Developments in the Greek government bond market - October 2004

18/11/2004 - Press Releases

Government bonds continued to trade higher in international markets in October for the fourth consecutive month. Investors' positive sentiment towards bonds was driven by the generally weak economic data released during the month both in the Euro-zone and in the US. In addition, oil prices continued to rise, with NYMEX crude oil futures trading above 56 USD a barrel on October 22, reinforcing investors' worries about future economic growth.

Greek government bonds trading on the electronic secondary securities market (HDAT) recorded significant gains during October. Benchmark bond prices rose between 42 and 119 basis points (bps) with the highest price increase recorded by the 20-year benchmark bond (maturing on 22/10/2022) that closed at 115.93 (with a yield of 4.58%) at the end of October from 114.74 (with a yield of 4.67%) a month earlier. The 10-year benchmark bond price (maturity 20/5/2014) traded at 103.31 (4.07%) on October 29 from 102.32 (4.19%) at the end of September. The average monthly 10-year yield spread between the Greek and the German benchmark bonds rose slightly to 19 bps from 18 bps during the previous four months.

The yield curve shifted downward while becoming steeper as yields at the short end of the curve (3-year maturity) fell 17 bps whereas at the long end of the curve (20-year maturity) they declined by 9 bps. The spread between 3 and 20-year bond yields therefore rose to 187 bps at the end of October from 179 bps at the end of September.

Market turnover on HDAT declined to EUR 106.52 billion from the historic high of EUR 135.75 billion recorded in September, with an annual increase of more than 30% (October 2003 turnover was EUR 79.72 billion). Investors' interest focused on bonds with remaining maturity between 7 and 10 years, which absorbed EUR 74.44 billion or 70% of the overall traded volume. Amongst individual bonds, the most actively traded was the 10-year benchmark that recorded EUR 47.66 billion worth of transactions, followed by the 15-year bond maturing on 11/1/2014 with EUR 11.70 billion. Of the 18,696 orders executed on HDAT 50.10% were "buy" orders and 49.90% "sell" orders.

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