Friday, January 27, 2012

Italian borrowing costs drop sharply in bond sale (AP)

MILAN ? Italy easily raised euro5 billion ($6.47 billion) from the markets Thursday in a pair of bond auctions that saw a sharp dropping in borrowing rates.

The sale showed healthy investor appetite in the first test of market sentiment since ratings agency Standard & Poor's on Jan. 13 dropped Italy's credit rating by two notches.

The country paid a yield of 3.763 percent on euro4.5 billion in two-year bond, compared with 4.85 percent in a comparable auction in December. The borrowing cost for a new bond expiring in September 2014 was 3.2 percent.

Italy has seen its borrowing costs ease in recent weeks, after yields on benchmark 10-year bonds pushed to the perilous 7-percent level last year. The 10-year bonds were trading at 6.04 percent on the secondary market after Thursday's auction.

Premier Mario Monti recently passed a euro30 billion austerity package and announced liberalization measures.

Monti has sought a vote of confidence in the lower house of Parliament on a series of additional measures that include an increase in tax on cigarettes and funds for Italians who have been exiled from Libya. The vote of confidence was expected later Thursday, while a separate vote on the additional measures is expected by Tuesday.

Source: http://us.rd.yahoo.com/dailynews/rss/eurobiz/*http%3A//news.yahoo.com/s/ap/20120126/ap_on_bi_ge/eu_italy_financial_crisis

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