Italy's borrowing costs edge up following Spain's downgrade

Italy sells maximum target for bonds in Thursday's auction

Italy's borrowing costs edge up following Spain's downgrade

(ANSA) - Milan, October 11 - Italian borrowing costs edged higher early Thursday amid concerns over another downgrade of Spain's economy. The spread between the ten-year Italian bond and Germany's benchmark Bund widened to 368.7 points, compared to 362 points at Wednesday's close, with a yield of 5.13% on the Italian paper. Still, investors bought the maximum target of 3.75 billion euros worth of July 2105-dated benchmark three-year bonds sold by the Italian treasury Thursday morning. Rating agency Standard & Poor's cut its rating on Spain by two notches Wednesday to BBB - and maintained a negative outlook. The surprise rating cut upset markets, which sometimes lump Spain and Italy together as two countries under significant economic stress. Spain's situation is more dire than Italy's, however, and analysts suggested the rating cut - which will drive up borrowing costs for Spain - may push it closer to seeking a bailout. The Italian Treasury also sold 2.25 billion euros in non-benchmark bonds maturing in September 2016, August 2018 and March 2025.

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