Developments in the Greek government bond market - May 2002

International bond markets were stable again in May, benefiting from the nervousness in the equity markets reflecting the economic and geo-political uncertainties. Investor expectations that interest rates would remain unchanged were confirmed by the wait-and-see stance adopted by both the European Central Bank and the Federal Reserve in the beginning of June.

In the Greek government bond market, turnover was strong reaching the highest level this year, while prices moved in line with the performance of other European bond markets. The monthly average spread of the 10-year benchmark bond over Bunds was unchanged at 34 basis points (bps) for the third consecutive month, dropping to the record low of 31 bps during the day on May 24, 2002.

Turnover on the electronic market HDAT was up at EUR 51.53 billion from EUR 38 billion in April and EUR 28.03 billion in May 2001. The most traded bonds were those with maturity up to 5 years, which attracted 52% of the total turnover. From the 9,214 orders executed on HDAT, 47% concerned purchases and 53% sales.

Overall, bond prices moved within narrow ranges during May. At month end, short to medium-term bonds traded marginally lower whereas long-term bonds slightly higher. More specifically, the 3, 5 and 7-year bond prices recorded losses of 2 to 6 price bps, the 10 and 20-year benchmark bonds gained 15 and 29 bps respectively, and the price of the 15-year bond remained virtually unchanged (108.00 on May 31 up from 107.99 on April 30).

Yields remained relatively stable at the levels of April. The yield curve was marginally flatter with the 3- to 20-year yield spread at 125 bps at the end of May down from 129 bps at the end of April.


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