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Italy's smooth bond auction

August 30, 2012

Italy has successfully completed a busy refinancing week by selling billions of euros in an auction of long-term sovereign debt. The treasury has managed to collect fresh money at lower interest rates.

https://p.dw.com/p/1607A
Sparks surrounding Italian euro coin
Image: picture alliance / dpa

Debt-stricken eurozone member Italy on Thursday announced it had borrowed 6.5 billion euros ($8.16 billion) at long-term bond auctions. A much-feared rise in yields on sovereign debt did not come about.

The treasury raised four million euros from 10-year bills at an interest rate of 5.82 percent, down from 5.96 percent at a similar auction in July. Another 2.5 billion euros were collected via five-year bonds at 4.73 percent, down from 5.29 percent a month ago.

The successful auctions on Thursday came on the back of Rome placing 12.75 billion euros in shorter-term debt earlier this week.

Good news for creditors

Analysts said market sentiment was influenced by hopes that the European Central Bank (ECB) might step into action again to keep borrowing costs down by resuming its controversial bond-buying program.

"Investors give credit to the ECB, and this is supporting bond markets even for vulnerable euro area nations like Spain and Italy," said Alessandro Giansanti, a strategist at the Amsterdam-based ING bank.

The money raised throughout the week will help Italy to pay back some of its debt load to creditors. Rome faces redemptions of 29 billion euros in September and is thus under more immediate refinancing heat than Spain.

hg/pfd (AFP, dpa)