Rome

Italian spread reaches lowest level since July 2011

Key indicator of market confidence drops to 267 points

Italian spread reaches lowest level since July 2011

Rome, January 10 - The spread between 10-year Italian bonds and the German benchmark dropped to its lowest level since July 2011 on Thursday when it fell below the 270-basis-points mark to 267, with a yield of 4.17%. The spread is a key measure of Italy's borrowing costs and of investor confidence in the country's ability to weather the eurozone crisis. It started the day at 279.7 points, but positive bond sales in Italy and Spain contributed to it coming down. The interest rate on 12-month Italian BOT bonds fell sharply to 0.864% at an auction on Thursday, compared to 1.456% in the last equivalent sale in December. The rate is the lowest registered for the 12-month bonds since January 2010. The Treasury sold 8.5 billion euros' worth of bonds at the auction. When outgoing Premier Mario Monti took over the helm of government from Silvio Berlusconi in November 2011, the spread was over 500 points and the yield was hovering around the 7% mark considered unsustainable in the long term.

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