UPDATE 1-Italy's three-year debt yields hit peak since March
By Francesca Landini
MILAN, June 13 (Reuters) - Italy's three-year borrowing costs jumped to their highest level since March at an auction on Thursday, as concerns the U.S. Federal Reserve could soon slow the pace at which it creates new money triggered selling pressure on riskier assets.
Japanese stocks plunged over six percent, European shares opened lower and buyers chose to park some liquidity in higher-rated long-term German Bunds in early European trade in a flight to safe-haven assets.
However, a recent rise in Italian yields from lows reached after a 10-month-long rally helped demand for both the three-year maturity and 15-year paper at the auction, allowing the treasury to come within reach of its 8-billion-euro sale target.
"Italy drew healthy demand at today's auction ... a sign that yields at these levels are considered attractive by investors," said a trader at an Italian bank.
When three-year yields were last at Thursday's level in March, Italy was still struggling to form a government after inconclusive February elections, and Fitch ratings agency had just downgraded it a few days before the sale.
The Italian treasury has so far this year sold 140 billion euros of medium- and long-term debt, more than 60 percent of its estimated target for 2013.
Demand for the three-year bond came in at 1.34 times the offer, in line with a month ago, while the bid-to-cover on the longer maturity rose to 1.73 from 1.32 at the previous sale.
Rome sold 3.42 billion euros of three-year bonds at 2.38 percent, up from 1.92 percent in May.
Borrowing costs, however, remained well below a peak of 5.30 percent reached a year ago just before European Central Bank President Mario Draghi pledged to take whatever action was needed to save the euro.
The treasury also issued 1.5 billion euros of 15-year bonds at 4.67 percent, in line with the previous April sale.
Along with fixed-income bonds, Rome placed two floating rate certificates, bringing the total debt sold to 7.83 billion euros, just below the planned maximum.
- Obama and Castro shake hands, Zuma humiliated at Mandela memorial |
- Google bus blocked in San Francisco gentrification protest
- Reporter can keep sources secret in Colorado theater shooting: court
- Couple, four children missing in Nevada found safe in canyon
- Regulators seek to curb Wall St. trades with Volcker rule |