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Italian yields decline at bond sale

Thursday, September 13 12:37:00

Italian three-year borrowing costs fell to their lowest in almost two years at an auction today, adding to signs that the euro zone's debt crisis may be easing after strong moves by the European Central Bank.

The Treasury also paid lower yields to sell its first 15 year bond in more than a year, indicating longer maturities too are benefitting from the ECB's plan for buying bonds issued by the euro zone members struggling most with high public debt.

"It really does go to show how much optimism there is on the back of the OMT (ECB bond-buying plan)," said Marc Ostwald, a strategist at Monument Securities.

A ruling on Wednesday by Germany's top court giving its backing to the euro zone's new rescue fund - and allowing the ECB to act should it be asked by a government - has added to the positive sentiment.

Italy sold the maximum targeted amount of 6.5 billion euros of bonds, a higher size than recent mid-month sales.

Analysts said reopening the 15-year bond for the first time since July 2011 denoted confidence and was important because it allowed Italy to marginally offset the moderate decline in its average debt maturity. (C ) Reuters