Italy sell T-bills but yields soar

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Italy sell T-bills but yields soar

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Italy’s short-term cost of borrowing jumped in its latest auction of government bonds as lenders worried about the euro zone debt crisis spreading.

The yield was 3.67 percent – up 150 basis points compared to last month.

However the markets did breath a sigh of relief that Rome – with its high public debt, low growth and domestic political tensions – was able to borrow all that it wanted to.

It raised6.75 billion euros in what was a test of appetite for Italian treasury bills.

“Italy has sold the target amount, which should give the market some relief in the very short term,” said Peter Chatwell, a rate strategist at Credit Agricole.

“The yield is much higher than June’s auction, reflecting the recent hammering the Italian credit has suffered.”