Italian spread steady after rate soars at bond auction

Sale was hotly awaited post-election test of investor sentiment

Italian spread steady after rate soars at bond auction

(see related stories on political situation) Rome, February 27 - The spread between the 10-year Italian bond and the German benchmark remained relatively stable on Wednesday despite interest rates rising sharply in a Treasury auction of state paper that was seen as a key test of investor sentiment after Italy's general election failed to produce a clear winner. The spread stood at 345 basis points at around 12.30 local time, one point higher than its closing level on Tuesday. The spread, a key measure of Italy's borrowing costs, had fallen to 340 before the auction, having gained over 50 points on Tuesday. The interest rate on 10-year Italian bonds soared to 4.83% at Wednesday's auction, the highest level since October. It was 4.17% at the last equivalent auction in January The rate on five-year bonds went up to 3.59%, compared to 2.94% at last month's auction.

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