Italy’s borrowing costs fell in a bond auction on Monday that raised 8.0 billion euros ($10.4 billion), taking advantage of greater liquidity in the market due to central bank policy action.
Italy raised 3.5 billion euros with bonds due in 2016 at 1.92 percent compared to 2.29 percent last month, 1.5 billion euros in bonds due in 2026 at 4.07 percent instead of 4.55 percent in February and 3.0 billion euros of a new bill due in 2018.
Italy’s borrowing conditions on the bond markets have improved in the last few weeks, particularly since the formation of a new government led by Enrico Letta which ended two months of deadlock.
But the country’s economic situation is still very difficult and the high level of public debt is increasing due to the lack of economic growth.
“Sentiment towards eurozone peripheral sovereign debt remains remarkably benign,” Nicholas Spiro, managing director of Spiro Sovereign Strategy, said in a statement.
Spiro said the auction was “solid” but that there had been “somewhat lacklustre” demand.
“There’s a growing acknowledgement on the part of many market participants that Spanish and Italian bond prices have become far too detached from fundamentals,” he said.
“There’s an inescapable sense that peripheral government bond markets are due for a correction – the timing and the abruptness of it being a matter of debate,” he added.
– Dow Jones Newswires contributed to this report –
Italian rates fall in 8-bn euro bond sale
