Higher yields for the Italian bond auction, Spain credit-rating down to BBB+ raises concerns
Italy auctioned a total of €5.95 bln in bonds on Friday, less than the maximum target of €6.25 bln, at higher borrowing costs due to rising concerns after Standard & Poor’s announced its decision to downgrade Spain’s long-term debt rating from A+ to BBB+ to reflect the Spanish banks’ needs for more capital and the growing unemployment rate.
The Italian Tesoro auctioned a total of €4.916 bln in five and ten-year bonds, just below its maximum target of €5 billion. They sold €2.416 bln of its 5-year paper at an average yield of 4.86 percent compared to 4.18 percent on March 29th and €2.5 billion of 10-year bonds at 5.84 percent versus 5.24 percent at the previous sale. The Treasury also sold bonds maturing in 2016 and 2019 at an average cost of 4.29 and 5.21 percent respectively.
EUR/USD peaked to a session high of 1.3243 shortly after the results from the Italian auction were announced.
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