Government bonds recorded significant gains on international markets during February for the third consecutive month as the economic backdrop remained supportive. Macroeconomic data released during the month both in the Euro-zone and in the US continued to indicate that global recovery is proceeding slowly. In addition, business and consumer confidence data were not so encouraging. These factors, led to the market view that interest rates could only remain at current levels or decline in the near future. In particular, investors saw the latter scenario as the most probable in the Euro-zone light of the strength of the Euro.

Greek government bonds trading on the electronic secondary securities market (HDAT) had a positive performance in line with the rest of the Euro-zone bonds. Amongst the benchmark bonds, prices rose between 63 and 184 basis points. The 20-year benchmark bond (maturing on 22/10/2022) recorded the highest price gains closing at 112.66 (with a yield of 4.85%) on February 27 compared to 110.82 (4.99%) on January 30. The 10-year benchmark bond gained 154 bps closing at 101.85 (with a yield of 4.27%) at the end of February compared to 100.31 (4.46%) 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 3-year bond (EUR 1.8 billion) maturing on 21/6/2007 and the 5-year bond (EUR 5.0 billion issued through syndication) maturing on 20/4/2009.

Yields dropped considerably for all maturities and especially at the short end of the yield curve reflecting market expectations for lower interest rates in the near future. 3-year bond yields declined to 2.80% on February 27 from 3.01% at the issuance on February 4 while 20-year bond yields were at 4.85% at the end of February compared to 4.99% at the end of January.

Market turnover on HDAT was EUR 51.38 billion in February, increasing more than 9% with respect to February 2003 (when it was EUR 47.04 billion). As in January, investors? interest focused on medium to long-term maturity bonds (7 to 20-year bonds) that absorbed 66% of the overall volume. In addition, of the 9,093 orders executed in HDAT during February, 51.1% were ?sell? orders and 48.9% ?buy? orders. Amongst individual bonds traded on HDAT, the 10-year benchmark bond recorded the highest traded volume with EUR 13.65 billion, followed by the 10-year bond maturing on 20/5/2013 (the previous benchmark) with EUR 6.82 billion. The 10-year benchmark liquidity, as measured by the ratio of the monthly traded volume over the amount outstanding, was 273% in February.