Milan - Arabstoday
Italy paid the least since last August to place all of a planned offer of ten-year bonds yesterday, firm evidence of an easing of the pressure on the Eurozone\'s third largest economy thanks largely to a flood of European Central Bank money into banks. Ten-year debt costs fell to 5.5 per cent, from 6.08 per cent a month ago, adding to hopes that Italy can get through a major refinancing hump in the first four months of the year relatively smoothly. The ECB\'s injection in December of almost half a trillion euros into money markets — set to be repeated today — has slashed borrowing costs for the Eurozone\'s struggling borrowers but there had been some more doubt about yesterday\'s sale. As ECB funds tend to find their way into shorter-dated government paper, longer-term issues have lagged behind in the rally the bonds of weaker countries such as Italy and Spain have enjoyed after the first ECB three-year tender in December. Yesterday\'s €3.75 billion (Dh18.5 billion) ten-year sale was covered 1.4 times, in line with the average. The total sale of €6.25 billion of fixed-rate BTP bonds hit the top of the planned range. Another wave of positive news for Italy which was one of the riskier countries in terms of supply this year,\" said ING strategist Alessandro Giansanti. The heavy funding schedule of the world\'s fourth-largest sovereign debtor had seemed almost unmanageable at the peak of the debt crisis in Nov-ember; ten-year auction yields have now fallen 200 basis points from the euro lifetime records hit then. BTP redemptions and coupon payments worth some €20 billion this week have likely supported demand at yesterday\'s sale. Another €23 billion in Italian zero-coupon and floating-rate bonds also come due this week. Five-year borrowing costs fell more than one percentage point from a month ago to 4.2 per cent at yesterday\'s sale. That was the lowest level since May, before Rome was dragged into the line of fire in the debt crisis. The Italian auction comes in a busy week for Eurozone sovereign issuers. German, French and Spanish bond auctions are scheduled in the rest of the week, after a Belgian bond sale on Monday. But Italy\'s auction benefited from the positive market momentum ahead of a second — and likely last — longer-term ECB liquidity tender today. Italian banks grabbed €116 billion in three-year funds at the first tender in late December — nearly a quarter of the total.