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Rome's borrowing costs drop to 5.5% on key debt sale
by Sarah Miloudi on Feb 28, 2012 at 10:47
Rome's borrowing costs have fallen to 5.50% following a key sale of 10-year notes.
The fall, from 6.08%, is the biggest since August a and comes as investors weigh the prospect of another cheap European Central Bank (ECB) liquidity drive.
Italy sold €6.25 billion worth of debt at this morning's sale. The authorities said demand for the notes was on a par with a similar debt auction held by Italy in January.
The outcome of this morning's sale largely fits with expectations, with cover not being overwhelming but enough to beat last month's auction.
More importantly, Italy was able to achieve its full target for the sale and this has been taken as a positive given that increased yields were not set as a concession beforehand.
Marc Ostwald, of Monument Securities, pointed out that the cover of today's sale is a telling sign about Wednesday's Long-Term Refinancing Operation (LTRO) by the ECB.
'Given that the cover was not really out of line with previous sales, it would be tenuous to argue that tomorrow's 3-yr LTRO gave a boost to the sale,' Ostwald said.
Investors' hopes for Europe may instead have been lifted by Monday's agreement on Greece and the decision to give it another financial handout, released in tranches.
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