Italy's borrowing costs dropped sharply as it sold the maximum amount of 5 billion euros at an auction of short-term debt on Thursday, January 26 helping drive down yields on its longer-dated bonds ahead of a crucial sale of five- and 10-year paper on Monday, Reuters reported.
At the first auction since credit rating agency Standard & Poor's downgraded Italy by two notches, yields on its two-year zero-coupon bonds fell to 3.76 percent - the lowest since August and more than a percentage point less than it paid a month ago.
"The Treasury managed to sell at the top of the range and at a lower yield," said Sergio Capaldi, an analyst at Intesa Sanpaolo in Milan. "We are returning to (yield levels seen) last summer but we still have a long way to go before the situation normalizes. A year ago yields were below 3 percent."
Italian government bond yields and the cost of insuring its debt against default fell after the auction, with the yield on its benchmark 10-year bond 15 basis points lower on the day at 6.09 percent. The cost of a five-year credit default swap fell 29 bps to ...








