Italian Yields Drop at Bond Auction as Stimulus Boosts Demand

Italian borrowing costs dropped at an auction of 7.17 billion euros ($9.38 billion) of bonds today as monetary easing by Japan is prompting investors to search for better returns.

Italy sold 4 billion euros of a new 2.25% 2016 bond at 2.29 percent, down from the 2.48 percent on similar maturity debt March 13. Investors bid 1.40 times the amount of the new three-year bond offered, up from 1.28 times last month.

The Rome-based treasury also sold longer-term debt, placing 1.67 billion of 4.75% 2028 bonds and 1.5 billion of floating-rate 2017 bonds to yield respectively 4.68 percent and 2.74 percent. All together, Italy sold 7.17 billion euros of debt, near the 7.5 billion-euro maximum target. The sale was probably helped by 16.7 billion euros of bond redemptions due on April 15.

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