October 28, 2015 / 10:17 AM / 4 years ago

Italy sells six-month debt at negative yields for first time ever

MILAN, Oct 28 (Reuters) - Italy sold six-month bills at an average negative yield for the first time on Wednesday as the prospect of further monetary easing in the euro zone pushed investors to pay to hold Italian debt.

Italy sold 6 billion euros ($6.6 billion) in bills due in April 2016 at a yield of minus 0.055 percent, down from a 0.023 percent yield paid a month ago on the same maturity.

Since then, the European Central Bank has indicated it could unleash new stimulus measures to shore up inflation as early as December, including possibly cutting its deposit rate further into negative territory.

The ECB’s message pushed Italian yields below zero on maturities of up to two years on the secondary market.

The sharp fall in Italian borrowing costs since the easing of the euro zone debt crisis has brought welcome relief to the country’s stretched public finances.

At the same time, it has made a traditional form of investment far less attractive to Italian savers.

On Tuesday, Italy sold 1.75 billion euros of zero-coupon, two-year paper at a yield of minus 0.023 percent for the first time ever.

The lowest yield paid at an auction of Italian bills had already fallen into negative territory in April, when six-month debt fetched a minimum yield of minus 0.011 percent.

Wednesday marked the first time in which also the average yield and the maximum yields were negative.

This is in stark contrast with a record 6.5 percent yield Italy paid to borrow over six-months in November 2011, when concerns over its public debt — the world’s fourth-largest — mounted amid fears of a possible break up of the euro zone. ($1 = 0.9053 euros) (Reporting by Valentina Za; Editing by Crispian Balmer)

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