An auction of 5 and 10-year Italian debt failed to meet the maximum target set for the sale and the 10-year borrowing costs breached the 6 percent mark amid rising fears of a contagion from the worsening Spanish banking crisis.
The Italian Treasury raised EUR 5.73 billion from the auction of its 5 and 10-year bonds or BTPs, while it targeted proceeds between EUR 4.5 billion and EUR 6.25 billion.
The agency placed EUR 2.34 billion of its September 2022 bond against a maximum target of EUR 2.75 billion. The yield on the benchmark bond rose to 6.03 percent, which is the highest since January, from 5.84 percent in the previous sale on April 27. The bid-to-cover ratio that reflects demand fell to 1.4 from 1.48.
The country sold EUR 3.40 billion of its new June 2017 bond against a top target of EUR 3.5 billion. The yield on the 5-year debt climbed to 5.66 percent from 4.86 percent in the April sale. Demand was 1.35 times the offer, slightly better than 1.34 in the previous auction.
Yesterday, Italy paid more to borrow the targeted EUR 8.5 billion for six months. The yield on the 183-day paper shot up to 2.104 percent from 1.772 percent in the previous sale on April 26.
On Monday, the country raised EUR 3.5 billion from the sale of its new May 2014 zero coupon bonds or CTZs at 4.037 percent yield.
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