Italy Sells Maximum Targeted at Three, Seven-Year Debt Auction

Italy sold the maximum amount targeted at an auction of 7.25 billion euros ($10 billion) of debt today as policy makers prepare more stimulus measures to prevent stagnant prices from derailing the economic recovery.

The yield on a new May 2017 note rose to 1.07 percent from a record low 0.93 percent at the previous sale of similar-maturity debt April 11. Investors bid for 1.53 times the amount of the 2017 debt sold, up from 1.41 at the previous sale.

The yield on Italian 10-year bonds dropped 2 basis points to 2.96 percent at 11:58 a.m. Rome time, pushing the difference with comparable German Bunds to 150.2 basis points.

Expectations of further easing at the June European Central Bank’s meeting ’’should fuel a further compression of the BTP/Bund spread in the coming weeks,’’ Chiara Cremonesi, a fixed-income strategist at UniCredit Research in London, said in a note to clients yesterday.

Spanish and Italian bonds gained last week after ECB President Mario Draghi said officials would be “comfortable” with taking action at their June meeting to support the economic recovery and push up an inflation rate that is less than half its target.

The Rome-based Treasury also sold 2.25 billion euros of 2021 notes at 2.29 percent, compared with 2.44 percent April 11. In addition, Italy sold a total of 1 billion euros of 2034 and 2037 bonds to yield 3.75 percent and 3.68 percent respectively.

Investors bid for 1.53 times the amount of the 2021 debt sold compared with 1.47 last month.

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