Rome

Short-term borrowing costs ease at Treasury auction

Six-month yield drops to post-March low of 1.503%

Short-term borrowing costs ease at Treasury auction

(ANSA) - Rome, September 26 - Italy's short-term borrowing costs eased a bit on Wednesday when an auction of six-month bonds saw yields drop to 1.503%. That marks the lowest rate for such bonds since March, and was lower than the 1.58% paid by the Italian government on six-month bonds at last month's auction. Italy sold nine billion euros at Wednesday's auction and Thursday, will offer another seven billion euros in longer-term debt, including five- and 10-year bonds. But investors are worried. Italy was forced to pay as much as 5.22% Wednesday morning on its 10-year paper and the spread with the German benchmark shot up 20 basis points to reach 371 points as investors dealt with fears over the country's economic future. Investors became nervous after ratings agency Standard & Poor's said Tuesday that it saw signs that the recession in Spain and Italy is deepening. The spread is a key barometer of market confidence in the country's ability to weather the eurozone crisis. It had eased in recent weeks after the European Central Bank announced plans to buy the bonds of countries at the centre of the eurozone crisis that are facing high borrowing costs.

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