MILAN: Italy's benchmark 10-year debt costs fell to a record low of 3.22 percent at an auction on Tuesday as the country's recovering economy and expectations of further policy action from the European Central Bank fed investor demand.
Italy sold 8.78 billion euros ($12 bln) in bonds, near the top of its planned range, at the first sale since Fitch Ratings on Friday raised to 'stable' the outlook on the sovereign rating, citing better funding conditions and the end of a two-year long recession.
Italy sold a 10-year bond due in September 2024 at 3.22 percent, down from 3.29 percent when it last issued it a month ago, and a euro lifetime low.
The sale was covered 1.3 times, broadly in line with the end-March's auction.
The Treasury also sold a new tranche of a five-year May 2019 bond at a record low yield of 1.84 percent. The same bond fetched an average yield of 1.88 percent a month ago, also the lowest level since the launch of the euro.
Demand totalled 1.3 times the amount sold, against 1.4 times previously.
"Italian bonds continue to perform well across the board," analysts at Citi said in a note.
"We expect Italy to remain supported and do not see any reason for sustained under-performance going forward."
A November 2019 floating-rate certificate was sold at an average 1.32 percent yield, little changed from a month ago, with demand equal to 1.4 times the amount placed.
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