Record turnover in bonds

Greek government bond trading reached a record high in October, marked by improved yields and lower prices, data released by the Bank of Greece yesterday showed. Turnover on HDAT, the electronic secondary securities market, rose to a record 69.3 billion euros in October compared with 66.4 billion euros in the previous month and 30.83 billion in October last year. Yields for both short- and long-term paper also improved. The three-year bond yield in October increased to 3.49 percent from 3.45 percent in the preceding month, while the 20-year bond produced a yield of 5.4 percent, up from 5.16 percent. Echoing the decline in international bond prices last month sparked off by investors’ flight to equities, Greek government bond prices fell between 19 and 312 basis points. Expectations of an upgrading by credit rating agency Moody’s helped to contain the losses. Moody’s upgraded Greek government bonds last week to A1 from A2, in a move affecting some $103 billion of debt securities. The 20-year bond maturing on October 22, 2022 posted the biggest decline, losing 312 basis points to close at 106.03 on October 31. The 10-year benchmark bond fared better, declining by just 142 basis points to 103.14 with a yield of 4.83 percent. The average yield spread declined to 31 basis points in October from 34 basis points a month earlier. Investors were more interested in short- and medium-term paper with maturity of up to seven years as they waited for the European Central Bank to cut its key interest rates. Turnover in this sector stood at 37.73 million euros, accounting for slightly more than half of the total. The 10-year benchmark was the most heavily traded, with transactions amounting to 7,547 million euros.

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