Italy's debt costs fall but demand lower than for Spanish bond sale
Source: Agencies |
January 14, 2012, Saturday
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Print Edition
Print Edition
ITALY'S three-year debt costs fell below 5 percent at the country's first longer-term bond sale of this year yesterday but demand failed to match the success of a Spanish sale the previous day, pointing to challenges ahead as Rome tackles a heavy refinancing load in the next few months.
Italy raised the maximum planned amount of 4.75 billion euros (US$6.07 billion) at the sale but failed to match interest at the Spanish auction where Madrid sold 10 billion euros of bonds, or twice the planned amount on Thursday, thanks to strong domestic appetite fueled by cheap European Central Bank funds.
"On the whole the auction results are mixed to soft, certainly far from the humdinger we saw in Spain yesterday (Thursday)," said Richard McGuire, strategist at Rabonbank in London.
"This will serve to dampen some of the markets enthusiasm in the wake of (Thursday's) Spanish auction ... It doesn't defeat the notion that the ECB extraordinary liquidity provisioning will support peripheral debt but it perhaps tempers expectations as to what degree these operations will support," he added.
Italy sold its November 2014 three-year benchmark bond at an average rate of 4.83 percent yesterday, down sharply from a yield of 5.62 yield at an auction just two weeks ago.
It was the lowest yield at a three-year auction since September but the bid-to-cover ratio fell to 1.22, versus an already weak 1.36 ratio at the end-December sale.
The end-December three-year sale was the first bond auction after the ECB's unprecedented injection of three-year funds and yields fell from a record of 8 percent seen in November at the height of the debt crisis.
Rome also sold two off-the-run issues yesterday, due in July 2014 and August 2018.
The ECB's liquidity boost, evident also at an Italian bill sale on Thursday where one-year yields more than halved, has boosted market sentiment on the two countries at the fore of the eurozone debt crisis, driving Italian yields sharply lower on the secondary market.
Italy raised the maximum planned amount of 4.75 billion euros (US$6.07 billion) at the sale but failed to match interest at the Spanish auction where Madrid sold 10 billion euros of bonds, or twice the planned amount on Thursday, thanks to strong domestic appetite fueled by cheap European Central Bank funds.
"On the whole the auction results are mixed to soft, certainly far from the humdinger we saw in Spain yesterday (Thursday)," said Richard McGuire, strategist at Rabonbank in London.
"This will serve to dampen some of the markets enthusiasm in the wake of (Thursday's) Spanish auction ... It doesn't defeat the notion that the ECB extraordinary liquidity provisioning will support peripheral debt but it perhaps tempers expectations as to what degree these operations will support," he added.
Italy sold its November 2014 three-year benchmark bond at an average rate of 4.83 percent yesterday, down sharply from a yield of 5.62 yield at an auction just two weeks ago.
It was the lowest yield at a three-year auction since September but the bid-to-cover ratio fell to 1.22, versus an already weak 1.36 ratio at the end-December sale.
The end-December three-year sale was the first bond auction after the ECB's unprecedented injection of three-year funds and yields fell from a record of 8 percent seen in November at the height of the debt crisis.
Rome also sold two off-the-run issues yesterday, due in July 2014 and August 2018.
The ECB's liquidity boost, evident also at an Italian bill sale on Thursday where one-year yields more than halved, has boosted market sentiment on the two countries at the fore of the eurozone debt crisis, driving Italian yields sharply lower on the secondary market.
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