Italy has sold all it wanted of a new ten-year bond at auction, with yields well under 6%, helped by expectations that the European Central Bank will act soon to ease borrowing costs for weaker euro zone members.
Investors bought €4 billion of bonds maturing November 2022, making bids for 1.42 times the amount on offer, up from 1.29 at a similar auction a month ago.
Borrowing costs on the BTP bond fell to 5.8%, down from 5.96% at last month's auction, making it the lowest yield on 10-year paper since March.
The bond sale was the first for Italian longer-term bonds since the ECB pledged on 2 August to take steps to ease borrowing costs in the currency bloc.
The central bank is due to unveil details of the measures it is planning at a meeting on 6 September.
"I would say that the outcome is positive. They sold the entire 10-year and five-year offer. It's a positive thing that the 10-year yield was below the grey market, where it had reached 5.9% in pre-auction," said Alessandro Giansanti, strategist at ING in Amsterdam.
Mr Giansanti said expectations of ECB intervention had opened a "positive window" of opportunity for the Treasury.
An effective system of bond-buying by the ECB could give Italy longer-term relief as it struggles to reduce a mammoth €2 trillion of debt at a time when its economy is shrinking.
Rome also sold €2.5bn of a five-year bond due in June 2017 and €793m of a floating rate CCTeu note maturing June 2017, with a total amount placed of €7.29bn, compared with a planned range of €5.25-7.5bn.
Italy paid 4.7% on the five-year bond, down from 5.29% at the end-July auction, again the lowest yield for a comparable instrument since March.
According to analysts' calculations, the Treasury has satisfied 72% of its total refunding target for 2012. It faces redemptions of €29bn in September, and another €57bn falls due in December.
"Domestic investors are more than happy to buy short-term debt ... but overseas investors still require significant premium to be attracted to the longer end," said Nick Stamenkovic, a bond strategist with RIA Capital Markets.
