Italian borrowing costs drop sharply in auction

Italian borrowing costs drop sharply in auction

MILAN (AP) — The Italian Treasury saw borrowing costs drop sharply in its latest bond sale Wednesday.

Italy easily raised (euro) 6.5 billion ($9.27 billion) through the sale of 12-month bonds. Yields dropped to 2.9 percent from 3.67 percent a month ago.

Demand was nearly double the offer, compared with a 1.5 percent cover rate last month.

Pressure on Italian yields has eased this week as the European Central Bank began buying the country’s debt in the secondary markets, bringing the 10-year spread between Italian bonds and the German bund below 280 basis points. It had risen some 100 basis points higher.

Italy previously canceled the mid-August medium- and long-term bond auction due to a favorable cash position and reduced funding needs.