Italy easily raised €3.5 billion today in the sale of three-year bonds.
It paid the lowest interest rates for such debt since March 2010, as investors shrug off political uncertainty ahead of elections.
The borrowing rate dropped to 1.85%, from 2.05% at the last such auction last month. Demand was 1.45 times the offer.
Analysts said the rates are dropping despite uncertainty over elections next month because investors see ''diminishing risks of a potential euro break-up''.
The election is a race between centrist forces backing caretaker Premier Mario Monti, former Premier Silvio Berlusconi's centre-right alliance with the Northern League and the centre-left Democratic Party led by Pier Luigi Bersani. Bersani leads in the polls and has pledged to continue reforms.
