Italy’s debt costs fall after it sell €7.2 billion worth of bonds

Italy paid the lowest yield on record to sell three- and seven-year bonds at auction today, a welcome relief to the country's public finances at a time when the government is betting on tax cuts to spur growth.

The treasury raised €7.225 billion in bonds, near the top of its planned issue range. Speculation that the European Central Bank could start an asset-purchase programme and signs of economic recovery in Italy fed demand from investors, analysts said.

Italy paid a record-low yield of 0.93 per cent on a three-year bond due in December 2016, down from 1.12 percent a month ago. The sale was covered 1.4 times against 1.5 times in March. It also sold a seven-year bond at 2.44 per cent, down from 2.71 per cent at the previous auction and the lowest level on this recently-introduced maturity.

Demand for the 2021 bond was around 1.5 times the amount sold, down from 1.6 last month.

A 30-year bond maturing in 2044 fetched an average 4.27 per cent yield, down from 4.59 per cent when it was last sold in February. The sale was covered 1.5 times, up from 1.4 times previously.