Italy's borrowing costs fall


Italy's benchmark 10-year borrowing costs eased below 6 per cent at auction today as rising expectations of bolder policy moves to counter the euro zone's debt crisis boosted demand for debt issued by the bloc's most vulnerable members.

Italy sold €5.48 billion in bonds, near the top of its planned issue range of up to €5.5 billion.

A September 2022 bond fetched an average yield of 5.96 per cent, down from 6.19 per cent a month ago. It was the cheapest yield on this maturity since April.

Tonday's €2.49-billion 10-year auction was covered 1.3 times, broadly in line with a month ago.

Five-year borrowing costs fell to 5.29 per cent today from 5.84 per cent at an end-June auction held amid high uncertainty as European Union leaders gathered in Brussels for a key summit.

Today's yield was the lowest five-year auction level for Italy since April.

Demand for the June 2017 five-year bond totalled 1.3 times the amount on offer, down from 1.54 times a month ago.

Italy also sold €750 million of a November 2015 bond no longer issued on a regular basis.

Spanish and Italian yields have eased from peaks hit early last week after European Central Bank President Mario Draghi on Thursday pledged to do whatever necessary to defend the single currency.

Similar expressions of committment by leaders of Germany, France and Italy in recent days have further reinforced market expectations of new measures to halt the rise in Spanish and Italian yields.