Spanish 10-year yields reach critical levels; Italy pays higher costs at auction
Spanish 10-year yields hit the 7% mark on Thursday, a euro-era high for the country, on the day following Moody’s credit rating downgrade to Baa3, and just one notch above junk status.
Italy managed to sell €4.5 billion at the upper range of its target €2.75 – €4.5 billion range, of which €3 billion in three-year bonds. Despite meeting decent demand, Italy paid much higher costs in today’s sale. The Tesoro paid 5.3 percent yield on the three-year paper compared with the average for this year of 3.86 percent paid for this maturity.
The three-year paper attracted bids 1.59 times the amount on offer, versus the average of this year of 1.81 times. Today’s sale also included bonds maturing in 2019 and 2020.
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