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Italian Borrowing Costs Rise

Italian Borrowing Costs Rise

Italy's borrowing costs for 3-year bonds increased at a debt auction that slightly missed the maximum target.

The treasury on Thursday sold EUR 2.884 billion of 2.5 percent BTP bonds maturing on March 2015 at a higher yield amid waning demand. The maximum planned amount was EUR 3 billion.

The bid-to-cover ratio came in at 1.43, down from 1.56 at the prior auction on March 14. The yield rose to 3.89 percent, the highest since mid-January, from 2.76 percent.

Further, it re-opened the issue of securities maturing in November 2015, 2020 and 2023, for a total of up to EUR 2 billion. Altogether, the government allotted EUR 4.884 billion versus a maximum target of EUR 3 billion to EUR 5 billion.

The treasury raised EUR 395 million from BTP maturing on November 2015 at a yield of 3.92 percent. Demand exceeded the offer by 3.26 times. It also sold EUR 687 million from BTP maturing on February 2020 and EUR 918 million from August 2023 bonds.

Yesterday's 1-year short-term bill issue saw borrowing cost doubling to 2.84 percent from 1.405 percent.

European Central Bank Executive Board member Benoit Coeure lifted market expectations for another bond-purchase program from the central bank.

Coeure urged governments to build on the steps already taken to restore sound fiscal positions and support long term growth. "We will do whatever it takes to fulfil our mandate of delivering price stability over the medium term for the 330 million people of the euro area," he added.

by RTT Staff Writer

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