MILAN: Italy raised 3.75 billion euros ($4.07 billion) at a bond sale on Tuesday, paying sharply lower rates on bonds to mature in 2014 and 2019, the Bank of Italy said, confirming analysts expectations.
The treasury said the yield -- the rate of return earned by buyers of the bonds -- on zero coupon bonds due to mature in 2014 dropped to 3.064 percent from 4.86 percent at the last similar session on July 26.
Rome also raised 455 million euros in a sale of inflation-linked debt to mature in 2016, paying 3.69 percent compared with 5.2 percent on June 26.
The treasury paid a slightly higher rate -- 4.39 percent compared with 4.32 percent on April 24 -- for inflation-linked bonds due in 2016.
Economic watchers had forecast the sale would go smoothly due to strong domestic demand for short-term debt.
The Treasury faces a bigger test on Thursday when it will issue up to 6.5 billion euros in five- and 10-year bonds.
Italy, eurozone's third largest economy and one of the biggest markets for sovereign bonds, is wallowing in deep recession and investor interest in Rome's 10-year issue has suffered.
Spain's short-term borrowing costs also plummeted Tuesday as the nation raised 3.6 billion euros ($4.8 billion) in three and six-month bills, helped by rising expectations of European Central Bank intervention.
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