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Italy sold 7.5 billion euros ($9.7 billion) of six-month Treasury bills, the maximum set for the auction, at the lowest yield on a similar note in more than two and a half years.
The Treasury in Rome today sold the 182-day bills at 0.919 percent, the lowest since April 2010 and down from 1.347 percent at the last auction on Oct. 29. Investors bid for 1.65 times the amount of bills offered, up from 1.52 times last month. Italy returns to the market tomorrow with the sale of as much as 6 billion euros of five and 10-year bonds.
“From a pricing perspective, Italy has overcome the euro- zone crisis,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “Italy is by no means out of the woods and has become a tale of two halves: an increasingly resilient and externally driven bond market and an economy in deep recession amid mounting political uncertainty.”
Italy’s 10-year yield declined 6 basis points to 4.67 percent at 12:07 p.m. in Rome, the lowest since June 2011. That left the difference with comparable-maturity German debt at 328 basis points.
Italy sold 3.5 billion euros of zero-coupon bonds yesterday at the lowest yield on a similar bond since October 2010.
The country’s bond yields have fallen since European Central Bank President Mario Draghi said in July that the Frankfurt-based institute would do what’s needed to keep the euro and announce in September a bond-buying program for nations in financing stress.
Italy needs to uphold Prime Minister Mario Monti’s pledge to shore up public finances in order to enjoy investor confidence even after elections due by April, the Organization for Economic Cooperation and Development said in its latest Economic Outlook report this week.
The Paris-based OECD also said that Monti’s efforts to reduce the deficit won’t allow Italy to start trimming the euro region’s second-biggest debt next year and that “further fiscal tightening in 2014 would be necessary.”
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