Italy Sells 7.5 Billion Euros of Bills as Crisis Concerns Ease

Italy sold 7.5 billion euros ($9.16 billion) of Treasury bills as borrowing costs dropped on optimism European leaders are taking steps toward resolving the region’s debt crisis.

The Rome-based Treasury sold the 361-day bills at 2.697 percent, down from 3.972 percent at the last sale of similar- maturity debt on June 13. Investors bid for 1.55 times the amount of bills offered, down from 1.73 times last month.

The yield on Italy’s 10-year bond dropped 4 basis points to 5.7 percent at 11:10 a.m. in Rome, leaving the difference with German bunds at 452.6 basis points. A bigger test for the Italian Treasury comes tomorrow when Italy sells as much as 5.25 billion euros of longer-maturity debt.

Prime Minister Mario Monti has been lobbying European partners to agree on a plan to give the the region’s permanent bailout fund, or ESM, more leeway to buy the bonds of countries meeting their fiscal goals, such as Italy and Spain, in order to lower their borrowing costs.

Monti said this week in Brussels he was confident that Italy wouldn’t follow Greece, Portugal and Ireland in asking for a full bailout “though Italy could be interested, as could other countries,” in tapping the ESM.

To contact the reporter on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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