Italian Yields Fall at $9.4 Billion T-Bill Sale After ECB Purchases Bonds
Italy Sells EU6.5 Billion of Bills After ECB Bond Purchases
Victor Sokolowicz/Bloomberg
The yield on Italy's benchmark 10-year bond has dropped 100 basis points this week as the ECB began purchasing Italian and Spanish bonds.
The yield on Italy's benchmark 10-year bond has dropped 100 basis points this week as the ECB began purchasing Italian and Spanish bonds. Photographer: Victor Sokolowicz/Bloomberg
Italy sold 6.5 billion of bills ($9.3 billion) today and borrowing costs fell from the previous sale after the European Central Bank began buying the country’s bonds, leading to a plunge in yields this week.
Italy sold its one-year bills to yield 2.959 percent, down from 3.67 percent at last auction on July 12. Demand was 1.94 times the amount on offer, compared with 1.55 times last month.
The yield on the country’s benchmark 10-year bond has dropped 100 basis points this week as the ECB began purchasing Italian and Spanish bonds. Prior to the ECB action, the countries’ yields had surged to euro-era records on concern the countries would become the next victims of the region’s debt crisis. Prime Minister Silvio Berlusconi agreed to speed up austerity and balance the country’s budget in 2013, a year earlier than planned, to secure the ECB’s support.
The extra yield investors demand to hold Italian 10-year bonds over German bunds fell 3 basis points to 278 basis points. That spread has narrowed 138 basis points since reaching a euro- era record 416 basis points on Aug. 5.
The surge in Italian bond yields has raised concern about the sustainability of the euro-region’s second-biggest debt, which ended last year at 1.8 trillion euros. Italy still faces 75 billion euros of maturing treasury bills this year and needs to sell about 80 billion euros of bonds to pay for redemptions and cover the budget deficit.
The biggest test for Italian financing will come in September when about 46 billion euros of bonds mature.
To contact the reporter on this story: Chiara Vasarri in Rome at
To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net.
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