Bloomberg News

Italy Sells 6 Billion Euros of Bonds as Borrowing Costs Drop

November 29, 2012

Italy sold 10-year debt at the lowest rate in two years amid increasing optimism on the outlook of the euro crisis after the region’s finance ministers reached an agreement on Greek aid.

Italy sold 3 billion euros ($3.88 billion) of its 5.50 percent 10-year benchmark bond at 4.45 percent, the lowest since November 2010, and down from 4.92 percent at the last auction on Oct. 30. Investors bid for 1.18 times the amount of bonds offered, down from 1.43 times last month.

The Rome-based Treasury also sold 3 billion euros of a 2017 bond to yield 3.23 percent, the lowest since October 2010, down from the 3.80 percent paid at an auction a month ago. Italy matched the maximum target for the auction. Investors bid for 1.65 times the amount of securities offered, down from 1.49 times last month.

Euro-group ministers would consider taking steps to ease Greece’s bailout terms, they said in a statement after a Nov. 26 meeting in Brussels. Italy’s bond yields have fallen since European Central Bank President Mario Draghi said in July that he would do what’s needed to keep the euro and followed in September by announcing a bond-buying program for nations in financing stress.

Still, as Italy is mired in its fourth recession since 2001, the Organization for Economic Cooperation and Development said this week that Prime Minister Mario Monti’s efforts to reduce the deficit won’t allow the country to start trimming the euro region’s second-biggest debt next year.

Italy’s 10-year yield declined 6.9 basis points to 4.52 percent at 11:18 a.m. in Rome, narrowing the difference with comparable maturing German debt to 313.9 basis points.

The Treasury sold yesterday 7.5 billion euros of six-month bills at the lowest yield on a similar note in more than 2 1/2 years. The day before the borrowing costs at an auction of 3.5 billion euros of zero-coupon bonds fell to the lowest since October 2010.

To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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