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Italy Sells Bills as Rates Remain Near Two-Year Record Low

Italy Sells Bills as Rates Remain Near Two-Year Record Low
A banner reading 'Monti Sconti,' a play on the Italian phrase 'Molti sconti,' meaning 'Many Reductions,' sits above a clothing store in Rome. Photographer: Alessia Pierdomenico/Bloomberg

Italy sold 8.5 billion euros ($11.3 billion) of six-month Treasury bills as rates remained near a two-year low amid optimism Prime Minister Mario Monti will play a role in the next government after February’s election.

The Treasury in Rome today sold the 177-day bills at 0.949 percent, up from 0.919 percent at the previous auction of similar-maturity debt Nov. 28, which was the lowest since April 2010. Investors bid for 1.57 times the amount of bills offered, down from 1.65 times last month. The Treasury also sold 3.25 billion euros of zero-coupon bonds due in 2014 to yield 1.884 percent compared with 1.923 percent Nov. 27.

Italy returns to the market tomorrow with the sale of as much as 6 billion euros of five and 10-year bonds.

The sale is the first since Monti announced on Dec. 23 that he would consider being a candidate for premier in the elections on Feb. 24-25. Monti encouraged parties backing his policies to run on his behalf in the vote.

“At the moment markets are serene and are not putting pressure on Italy,” Nicola Marinelli, who oversees $180 million at Glendevon King Asset Management in London, said by e-mail before the auction. “The idea is that Monti will play a role in the next administration and whatever the outcome of the elections will be, the next government will do the right things for the economy and the reforms.”

Economic Revamp

Italy’s 10-year yield rose 6 basis points to 4.5 percent at 11:15 a.m. in Rome, leaving the difference with comparable-maturity German debt at 315 basis points.

Monti’s economic revamp, including an overhaul of pension and labor laws, helped tame the country’s public finances and restore investor confidence, while deepening the nation’s fourth recession since 2001.

“Together, we have saved Italy from disaster,” Monti wrote in a Twitter post yesterday. Italians should “take action” because complaining is useless, he said.

Monti’s road map designed to make Italy more competitive includes further efforts to open up closed professions, measures to battle conflict of interest and corruption, and steps to boost female employment.

Centrist Italian parties, which have been wooing Monti for months, have already decided to embrace his agenda. Monti’s move may make it more difficult for the Democratic Party, which leads in opinion polls, to obtain a majority in the upper house of Parliament.

Italian Democratic Party leader Pier Luigi Bersani said yesterday there’s nothing “surprising” in Monti’s agenda and while his party agrees with some of the measures, some others should be discussed, Ansa news agency reported.

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