Dec. 28 (Bloomberg) --Italy sold 9 billion euros ($11.8 billion) of six-month Treasury bills and borrowing costs plunged from the previous auction as the government passed measures aimed at trimming the euro region’s second-biggest debt.
The Rome-based Treasury sold the 179-day bills at a rate of 3.251 percent down from a 14-year-high of 6.504 percent at the last auction of similar maturity securities on Nov. 25. Demand was 1.7 times the amount on offer, compared with 1.47 times last month. The Italian Treasury also sold 1.7 billion euros of zero- coupon notes due 2013 at 4.853 percent
A “successful start to the week’s Italian supply schedule,” said Alessandro Mercuri, an interest-rate strategist at Lloyds Bank Corporate Markets in London. “Italy managed to get away the whole 9 billion allocation amount. Domestics are likely to have facilitated demand, given the excess liquidity currently floating around.”
Prime Minister Mario Monti secured final approval in Parliament last week for a sweeping budget plan aimed at raising revenue and boosting anemic economic growth as he tries to persuade investors Italy can tame the country’s 1.9 trillion- euro debt and avoid a bailout. The measures, including a tax on luxury goods, a levy on primary residences and higher gasoline prices, may deepen the country’s recession and until today had donw little to bring down borrowing costs.
