MILAN, July 27 (Reuters) – Italy’s six-month borrowing costs
fell to 2.454 percent at auction on Friday, mirroring a rally in
the debt of stressed euro zone countries fuelled by a strong
commitment to the single currency signalled by the head of the
European Central Bank.
It was the lowest yield since May Italy has paid on this
maturity.
At a similar sale a month ago, six-month yields had soared
to 2.96 percent, the highest since December, as investors
fretted about Spain’s troubles and their impact on Italy.
Friday’s auction was covered 1.6 times, in line with a month
ago.
Bold comments by ECB President Mario Draghi on Thursday that
the central bank was ready to do whatever necessary to save the
euro have eased market pressure on Italian and Spanish bonds,
especially at the short end of the curve.
Draghi said unreasonably high government borrowing costs
fell in the ECB’s remit if they hampered monetary policy.
Caution about the speed of possible ECB action pushed
Italian yields higher ahead of the auction compared with lows
seen earlier in the session.
Italy will face a more challenging test on Monday when it is
due to offer five- and 10-year bonds for up to 4.75 billion
euros, together with a three-year bond it no longer sells on a
regular basis for up to 750 million euros.
