Italian bond auction met strong demand, yields rose to a new euro era high
The Italian Treasury managed to auction €2.5 bln of its 2-year zero-coupon bond at an average yields of 4.86% compared to 4.71% a month ago. Italy’s 2-year yields rose to their highest level since the crisis’ peak last November. Yields over Italian debt track Spain’s borrowing costs higher as investors worry that these two countries remain the most vulnerable to the current euro-area debt crisis. The bid-to-cover ratio was 1.78 times, versus 1.65 in the previous sale last June.
Italy will face another test on Friday as its treasury will try to sell €8.5 bln in 6-month bills, followed by another auction scheduled next Monday in 5 and 10-year bonds.
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