Summary:

Yields to maturity, both nominal and real, declined during 2003, thus continuing the trend evident in the last few years except 2002. The decrease in yields began in March with the announcement of the economic program, the receipt of guarantees from the US and the swift conclusion of the war in Iraq. As yields to maturity declined, financial uncertainty eased, reflected among other things by the prices of financial derivatives. Yields continued along the downward trend during the rest of the year, and by its end had reached the levels which had prevailed at the end of 2001. In the equity market, the trend evident in 2001and 2002 reversed, and the leading indices rose sharply on high turnover. This occurred against the background of a decrease in financial uncertainty, the process of lowering the interest rate and the increased efficiency of many firms.

The turnover in Treasury bills increased significantly in 2003. In contrast, there was a slight decline in the turnover of government bonds although it still remained higher than in previous years.

The net amount of tradable capital raised by the government in the domestic market declined in 2003 in contrast to the expansionary trend of previous years as, the government turned to borrowing abroad, principally within the framework of the guarantees, thus also contributing to the decrease in yields in the government bond market. In 2003, there was a sharp increase in the issue of corporate, primarily nontradable, bonds.

The Securities Market - PDF file