Italy paid the least since last August to place all of a planned offer of 10-year bonds on Tuesday, firm evidence of an easing of the pressure on the euro zone's third largest economy thanks largely to a flood of European Central Bank money into banks. Ten-year debt costs fell to 5.5 percent, from 6.08 percent a month ago, adding to hopes that Italy can get through a major refinancing hump in the first four months of the year relatively smoothly.
The ECB's injection in December of almost half a trillion euros into money markets - set to be repeated on Wednesday - has slashed borrowing costs for the euro zone's struggling borrowers but there had been some doubts about Tuesday's sale. As ECB funds tend to find their way into shorter-dated government paper, longer-term issues have lagged in the rally that bonds of weaker countries such as Italy and Spain have enjoyed since the first ECB three-year tender in December.
Tuesday's 3.75 billion euro 10-year sale was covered 1.4 times, in line with the average. The total sale of 6.25 billion euros of fixed-rate BTP bonds hit the top of the planned range. Tuesday's auction brings Italy's total gross issuance this year to around 46 billion euros, or roughly half of the 90 billion euros of bonds maturing between February and April.
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