MILAN, July 29 (Reuters) - Italy’s short-term borrowing costs fell to their lowest level since May at an auction on Monday, thanks to large debt redemptions in the next few days.
The treasury sold 8.5 billion euros ($11.3 billion) of bills maturing on January 31, 2014, paying a yield of 0.8 percent, down from 1.05 percent at a similar sale at the end of June.
Demand was 1.47 times the offer at Monday’s sale, compared with a bid-to-cover of 1.36 last month.
Monday’s sale brings Italian short-term debt costs back to levels seen at the end of May, when the U.S. Federal Reserve’s hint it would turn off the taps started to push yields up both for peripheral and core bonds.
On the longer part of the Italian yield curve some tensions emerged as Rome will offer a new 10-year bond and will tap five-year paper for up to 6.75 billion euros on Tuesday.