Italy’s Borrowing Costs Rise at One-Year Bill Auction

Italy’s borrowing costs rose at a sale of one-year bills on investor concern the European Central Bank will fail to revive the euro region’s faltering economy.

The Rome-based Treasury sold 8 billion euros ($10.1 billion) of 365-day bills maturing in Oct. 2015 at 0.301 percent, up from 0.271 percent at the previous auction of similar-maturity debt Sept. 10. Investors bid 1.70 times the amount sold, compared with 1.64 last month. Italy redeems almost 9.8 billion euros of bills Oct. 14.

“The latest ECB meeting has led to some disappointment in the market, with chances of QE being lowered” as ECB President Mario Draghi avoided any commitment on balance sheet expansion, Elia Lattuga, a fixed-income strategist at UniCredit Bank AG in Milan, said in a note to clients yesterday. “A lower-than-expected take-up at the September TLTRO also contributed to some pressure at the short end of the curve.”

The yield on Italian 10-year bonds rose 1 basis point to 2.32 percent at 11:09 a.m. Rome time, pushing the difference with comparable German bunds to 143 basis points.

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