Italy sold 9 billion euros ($11.3 billion) of Treasury bills at the lowest rate since March on optimism the European Central Bank will intervene to curb the country’s borrowing costs.
The Rome-based Treasury sold the 181-day bills at 1.585 percent, down from 2.454 percent at the last sale of similar- maturity debt on July 27. Investors bid 1.69 times the amount of bills offered, up from 1.61 times last month.
Italy’s 10-year yield rose 1 basis point to 5.84 basis points at 11:10 a.m. Rome time, pushing the difference or spread with similar-maturing German debt to 453 basis points.
The sale comes after the Treasury yesterday priced a zero- coupon 2014 bond to yield 3.064 percent, down almost 2 percentage points from the last sale a month ago. A bigger test comes tomorrow, when Italy sells as much as 7.5 billion euros of five- and 10-year debt.
European Central Bank President Mario Draghi opened the door earlier this month to buying Spanish and Italian securities, in conjunction with the euro area’s bailout funds. Draghi is expected to announce details of the new bond-buying program when the ECB’s Governing Council meets on Sept. 6.
Monti, who has been joined by French President Francois Hollande and Spanish Prime Minister Mariano Rajoy in calling for policies to stimulate growth and lower high borrowing costs, continues his diplomacy abroad to calm Europe’s sovereign debt crisis. He’s due to meet later today in Berlin with German Chancellor Angela Merkel for talks on the euro crisis.
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