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Developments in the Greek government bond market - April 2009

07/05/2009 - Press Releases

Government bond prices fell and yields rose in April on the German and the US markets, and particularly at the long end of the US yield curve, as market sentiment improved and investors shifted funds on riskier assets following emerging signs that the pace of contraction of economic activity in some countries had started to slow. In addition, investor concerns about the scale of new debt supply pushed yields on those markets even higher. On the contrary, European government bonds with lower credit ratings benefited from the improvement in market sentiment and their yields fell. Therefore, yield spreads with respect to equivalent German bonds narrowed significantly.

On the Greek electronic secondary securities market (HDAT), Greek government bond yields fell significantly in April across the whole maturity spectrum, in line with the performance seen in other Euro-zone "peripheral" markets, and yield spreads with respect to German bonds also declined considerably. Specifically, the 30-year benchmark bond yield recorded the biggest drop, by 41 basis points (bps), to 5.65% at the end of April from 6.06% at the end of March, the 3-year benchmark bond yield fell by 33 bps to 3.48% from 3.81% and the yield on the 10-year benchmark bond declined by 40 bps (including rounding) to 5.35% from 5.74%. As a result, the average monthly spread between the Greek and the German 10-year bond yields narrowed significantly in April to 232 bps from 280 bps in March. In addition, the yield curve was considerably flatter at the end of April, with the yield difference between the 30 and the 3-year bond yields narrowing to 217 bps from 225 bps a month earlier.

 Benchmark bond prices rose markedly, particularly on long-term maturities, with the 30-year bond recording the largest gain, as its price increased to 84.69 at the end of April from 79.62 at the end of March. The 10-year bond price rose to 104.96 on April 30 from 101.88 on March 31, while the 3-year bond price rose to 102.20 from 101.34.

Trading volume on HDAT in April amounted to EUR 12.31 billion worth of transactions compared to EUR 16.24 in March and to EUR 17.68 billion in April 2008. The daily average turnover was EUR 616 million compared to EUR 812 million during the previous month. The most actively traded bonds were the 10-year and the 5-year benchmarks with both EUR 3.3 billion worth of transactions. Of the 2,360 orders executed on HDAT, 61.7% were "buy" orders and 38.3% "sell" orders.

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