Italy sold 3.91 billion euros ($4.9 billion) of bonds, near the maximum set for the auction, and borrowing costs rose after two more euro-area nations officially requested bailouts, hurting demand for its debt.
The Treasury sold 2.99 billion euros of zero-coupon 2014 debt to yield 4.712 percent, up from 4.037 percent at the previous auction on May 28. Investors bid for 1.65 times the amount offered, similar to the 1.66 times last month. The Rome- based Treasury also sold 916 million euros of inflation-linked bonds due in 2016 and 2026 to yield 5.2 percent and 5.29 percent, respectively.
Italy’s 10-year bond was weaker after the auction, with the yield rising 7 basis points to 6.08 percent at 11:25 a.m. Rome time, pushing the difference or spread with similar-maturing German debt to 457 basis points.
European leaders gather on June 28-29 in their latest summit meeting to try to stop contagion from the debt crisis. The meeting comes days after Spain and Cyprus officially requested emergency aid, which will bring to five the number of euro-nations with financial lifelines. Leaders remain divided over how to achieve a common fiscal policy and whether to collectively issue debt to try to stem the crisis.
French Finance Minister Pierre Moscovici will meet his German counterpart Wolfgang Schaeuble, Italy’s deputy Finance Minister Vittorio Grilli and Spain’s Economy Minister Luis de Guindos tonight in Paris to prepare for the summit.
Spanish bonds extended their declines today after the Treasury was forced to pay 2.362 percent to sell three month bills, more than twice the level of the last sale on May 22. The yield on the country’s 10-year yields bonds climbed eight basis points to 6.72 percent after the auction.
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