ECONOMY

Bonds improve performance

Government bonds traded on the electronic secondary securities market (HDAT) showed a positive performance in February, in line with developments in the rest of the eurozone, the Bank of Greece said yesterday. Among the benchmark bonds, prices rose between 63 and 184 basis points (bps). The 20-year benchmark bond (maturing on October 22, 2022) recorded the biggest gains, closing at 112.66 (with a yield of 4.85 percent) on February 27 compared to 110.82 (4.99 percent) on January 30. The 10-year benchmark bond gained 154 bps, closing at 101.85 (with a yield of 4.27 percent) at the end of February compared to 100.31 (4.46 percent) at the end of January. The average yield spread between the Greek and the German 10-year benchmark bonds was 22 bps in February from around 20 bps the previous month. Two new benchmarks were launched successfully during the month, the three-year bond (1.8 billion euros) maturing on June 21, 2007 and the 5-billion-euro, five-year bond maturing on April 9, 2009. Yields dropped markedly for all maturities, especially at the short end of the yield curve, reflecting market expectations for lower interest rates in the near future. Three-year bond yields declined to 2.80 percent on February 27 from 3.01 percent at the issuance on February 4, while 20-year bond yields were at 4.85 percent at the end of February compared to 4.99 percent at the end of January. Market turnover reached 51.38 billion, increasing more than 9 percent in relation to Feb. 2003. As in January, investors’ interest focused on medium- to long-term maturity bonds (seven- to 20-year) that absorbed 66 percent of the overall volume. Of the 9,093 orders executed, 51.1 percent were «sell» orders and 48.9 percent «buy.»