December 28, 2018 / 4:21 PM / 3 months ago

Italy budget deal pushes bond auction yields back to pre-selloff levels

FILE PHOTO: Italian Prime Minister Giuseppe Conte and Italian Economy Minister Giovanni Tria attend a debate at the Senate in Rome, Italy, December 19, 2018. REUTERS/Tony Gentile/File Photo

MILAN (Reuters) - Italy’s borrowing costs at auction fell back to levels last seen before an anti-European coalition formed in May after the Rome government struck a deal with the EU over next year’s budget.

The yield on a 10-year BTP bond due on Dec. 1, 2028 came in at 2.70 percent, its lowest level since April. Last month Rome paid 3.24 percent to sell the same bond at auction.

The bid-to-cover ratio at Friday’s smaller auction was 1.53 compared with 1.41 at end-November sale.

Five-year bond yields fell to 1.79 percent, also the lowest level since April, down from 2.35 percent at the end-November auction. Demand totaled 2.67 billion euros compared with a 2 billion euro offer and the bid-to-cover ratio was broadly unchanged.

The Treasury also sold a floating rate note CCTeu note and an off-the-run 10-year BTP bond raising in total 5 billion euros ($5.7 billion), the top planned amount.($1 = 0.8724 euros)

Reporting by Francesca Landini, editing by Valentina Za

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