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Italian Borrowing Costs Tumble At Bill Auction

2/27/2012 6:49 AM ET

Italy's borrowing costs declined sharply at a debt auction on Monday and the country raised its target amount ahead of the European Central Bank's second offering of three-year loans later this week.

The Italian Treasury raised EUR 12.25 billion from a sale of its bills or BoTs in line with the target set for the sale. The auction attracted bids totaling EUR 19.542 billion.

The country sold EUR 8.75 billion of 6-month BoTs at yield 1.202 percent, down from 1.969 percent paid in a sale on January 27. Demand was 1.36 times the offer, broadly unchanged from the previous sale that saw a bid-to-cover ratio of 1.35.

The agency also placed EUR 3.5 billion of flexible BoTs due December 2012 at yield 1.290 percent. Investors bid 2.19 times the amount offered.

Italy is set to auction medium-to-longer term debt on Tuesday. The country is targeting proceeds in the range of EUR 2 billion and EUR 2.5 billion from the sale of its 4.75 percent May 2017 bonds or BTPs. The treasury will also auction a new line of 5.50 percent September 2022 BTPs with an aim to raise EUR 3 billion to EUR 3.75 billion.

by RTT Staff Writer

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