Sept. 29 (Bloomberg) -- Italy plans to sell 9 billion euros ($12.3 billion) of bonds today as it seeks to finance 23 billion euros of maturing debt with contagion from the region’s sovereign crisis boosting the nation’s borrowing costs.
The Treasury sells as much as 2.5 billion euros of bonds maturing in March 2022, 2 billion euros of bonds due August 2021, 3.5 billion euros of three-year securities and 1 billion euros of floating-rate debt due 2015.
“As long as the sales are covered, then the situation does not change much,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “Italy still has too much debt, a bad and fractious government, needs to address and pass structural reforms very soon, and hope that Greece does not default, if things are to improve.”
Italy’s borrowing costs surged to euro-era records last month as Greece’s slide toward default fueled concern the country with the region’s second-biggest debt would become the next victim of the region’s sovereign crisis. The European Central Bank began buying Italian securities on Aug. 8 and bonds have since given back much of the initial gains triggered by the purchases.
The auction comes after the country yesterday sold 750 million euros of inflation-linked bonds. Investors bid for 2.1 times the amount of the securities on offer.
Yesterday’s “well-received linker reopening should not be extrapolated for tomorrow’s auctions,” David Schnautz, a fixed- income strategist at Commerzbank in London, said yesterday. “These will be a much bigger hurdle to clear.”
Italy also sold 14.5 billion euros of treasury bills and bonds on Sept. 27. The funds will help finance 8 billion euros of maturing bills tomorrow, when 13.5 billion euros of zero- coupon securities also mature.
The country still has almost 90 billion euros in bills and longer-term debt maturing this year.
--Editors: Andrew Davis, Fergal O’Brien
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