Italy Yields Seen Climbing as Renzi Gets Mandate: Euro Credit

Investors paid little attention to Italy’s political intrigue this month, focusing instead on early signs of economic recovery and the outgoing government’s commitment to budget rigor. That may start to change.

Borrowing costs fell to record lows at sales of three-year debt and one-year bills as a political feud pushed Prime Minister Enrico Letta from office and cleared the way for his chief antagonist, Matteo Renzi, to become designated premier. On Feb. 14 data showed Italy’s return to growth after more than two years while the government debt at 2.07 trillion euros ($2.83 trillion) was still the euro area’s second-biggest as a percentage of gross domestic product.