Italy's 5-yr debt costs rise at auction, 10-yr stable

MILAN Thu Aug 29, 2013 5:24am EDT

MILAN Aug 29 (Reuters) - Italy's 10-year borrowing costs remained stable at 4.46 percent at auction on Thursday, but it had to pay a higher premium to place a new five-year bond as a compromise on an unpopular housing tax failed to dispel worries about the future of a shaky coalition government.

The Treasury sold 6.0 billion euros in five- and 10-year bonds, reaching its maximum planned amount.

The 2.5 billion euro 10-year sale was covered 1.5 times, up from 1.32 percent at a previous auction held at the end of July.

Italy also sold 3.5 billion euros of a new five-year bond maturing in December 2018 at a 3.38 percent yield, up from 3.22 percent a month ago.

Demand for the new five-year bond totalled 1.22 times the amount sold, against a bid-to-cover of 1.36 times at the previous auction.

Italy's government reached a deal on Wednesday to reform an unpopular property tax, easing a source of persistent tension which had threatened to split the fragile coalition of traditional rivals from the left and right.