Italian 10-Year Borrowing Costs Ease

Reuters

Italy's benchmark 10-year borrowing costs eased below 6 percent at auction on Monday 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 euros in bonds, near the top of its planned issue range of up to 5.5 billion euros.

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

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

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

Monday'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 euros 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.