MILAN: Return-hungry investors snapped up Italian bonds at an auction yesterday, pushing yields on three-year paper below two percent for the first time since March 2010 with and little concern shown for the upcoming general election.
The treasury sold ¤3.5bn of three-year bonds paying a yield of 1.85 percent, down from 2.5 percent at a similar sale a month ago.
While three-year yields fell by 65 basis points at yesterday’s sale, they continue to look attractive compared with near-zero return on equivalent German Bunds.
Italy, along with Spain, is one of the main beneficiaries of the European Central Bank’s pledge to buy bonds if a eurozone country gets into trouble and needs a bailout.
This promise is acting as a backstop for investors, particularly with shorter-dated debt which the ECB will target.
Reuters
