Italy sold nearly 5.2 billion euros ($7.38 billion) of fixed-rate BTP bonds on Friday paying a slightly lower yield on the two bonds on prospects for a tightening of spreads with German bunds. The Italian Treasury sold 3.413 billion euros of five-year BTP, just off the maximum of 3.5 billion euros it had targeted. It sold all the 1.750 billion euros it wanted to sell of the 30-year BTP, albeit with weak cover.
The yield on the five-year BTP eased 6 basis points to 3.77 percent, from the previous auction, while the 30-year fell 8 basis points to 5.43. "Overall it is pretty decent, much in line with the Italian auctions we've seen this year. The bid-to-cover is in line with the year-to-date average," Michael Leister, WestLB strategist in Duesseldorf, Germany said.
The 5-year BTP bond cover rose to 1.448 times, from 1.25 at the previous auction, which strategists said reflected interest in this part of the BTP interest rate curve. After Friday's auction, the spread between the yield on Italy's 10-year BTP and the equivalent German bund was at 160 basis points, from 156 before the auction.