Bloomberg News

Italy Sells 3.75 Billion Euros of 10-year BTPs, Yields 5.22%

August 30, 2011

Aug. 30 (Bloomberg) -- Italy sold 3.75 billion euros ($5.4 billion) of 10-year securities and borrowing costs fell in its first auction since the European Central Bank started purchasing the country’s debt three weeks ago.

Italy sold its 10-year bond to yield 5.22 percent. Demand was 1.27 times the amount on offer. The Treasury also sold 2.99 billion euros of bonds maturing in 2014.

The yield on the country’s benchmark 10-year bond has dropped more than 100 basis points since the ECB began buying Italian and Spanish debt on Aug. 8. Before the ECB stepped in, yields surged to euro-era records on concern the countries would become the next victims of the region’s debt crisis.

The auction came a day after Prime Minister Silvio Berlusconi bowed to demands that he revise a 45.5 billion-euro austerity plan, dropping a tax on the highest earners and limiting cuts to regional governments.

The extra yield investors demand to hold Italian 10-year bonds over benchmark German bunds rose 10 basis points to 296 basis points at 11:21 a.m. in Rome, compared with a euro-era record of 416 basis points on Aug. 5.

Today’s sale will help pay for 9 billion euros of bills maturing on Aug. 31. Italy still faces 75 billion euros of maturing bills this year and needs to sell about 80 billion euros of bonds to pay for redemptions and the budget deficit. The biggest test comes in September when about 46 billion euros of bonds mature.

--Editors: Andrew Davis, Mark McCord.

To contact the reporter on this story: Chiara Vasarri in Rome at To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net.


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